[Federal Register Volume 85, Number 192 (Friday, October 2, 2020)]
[Proposed Rules]
[Pages 62239-62266]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-21589]


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SMALL BUSINESS ADMINISTRATION

13 CFR Part 121

RIN 3245-AG89


Small Business Size Standards: Agriculture, Forestry, Fishing and 
Hunting; Mining, Quarrying, and Oil and Gas Extraction; Utilities; 
Construction

AGENCY: U.S. Small Business Administration.

ACTION: Proposed rule.

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SUMMARY: The U.S. Small Business Administration (SBA) proposes to 
increase its receipts-based small business size definitions (commonly 
referred to as ``size standards'') for North American Industry 
Classification System (NAICS) Sectors related to Agriculture, Forestry, 
Fishing and Hunting; Mining, Quarrying, and Oil and Gas Extraction; 
Utilities; and Construction. SBA proposes to increase size standards 
for 68 industries in those sectors, including 58 industries and 2 
subindustries (``exceptions'') in NAICS Sector 11 (Agriculture, 
Forestry, Fishing and Hunting), 3 industries in Sector 21 (Quarrying, 
and Oil and Gas Extraction), 3 industries in Sector 22 (Utilities), and 
1 industry and 1 subindustry (``exception'') in Sector 23 
(Construction). SBA's proposed revisions relied on its recently revised 
``Size Standards Methodology'' (Methodology). SBA seeks comments on its 
proposed changes to size standards in the above sectors, and the data 
sources it evaluated to develop the proposed size standards.

DATES: SBA must receive comments to this proposed rule on or before 
December 1, 2020.

ADDRESSES: Identify your comments by RIN 3245-AG89 and submit them by 
one of the following methods: (1) Federal eRulemaking Portal: 
www.regulations.gov. Follow the instructions for submitting comments; 
or (2) Mail/Hand Delivery/Courier: Khem R. Sharma, Ph.D., Chief, Office 
of Size Standards, 409 Third Street SW, Mail Code 6530, Washington, DC 
20416.
    SBA will post all comments to this proposed rule on 
www.regulations.gov. If you wish to submit confidential business 
information (CBI) as defined in the User Notice at www.regulations.gov, 
you must submit such information to U.S. Small Business Administration, 
Khem R. Sharma, Ph.D., Chief, Office of Size Standards, 409 Third 
Street SW, Mail Code 6530, Washington, DC 20416, or send an email to 
[email protected]. 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.

FOR FURTHER INFORMATION CONTACT: Jorge Laboy-Bruno, Ph.D., Economist, 
Office of Size Standards, (202) 205-6618 or [email protected].

SUPPLEMENTARY INFORMATION: To determine eligibility for Federal small 
business assistance, SBA establishes small business size definitions 
(usually referred to as ``size standards'') for private sector 
industries in the United States. SBA uses two primary measures of 
business size for size standards purposes: Average annual receipts and 
average number of employees. SBA uses financial assets for certain 
financial industries and refining capacity, in addition to employees, 
for the petroleum refining industry to measure business size. 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 tangible net worth and net income 
based alternative size standards to determine eligibility for those 
programs.
    In September 2010, Congress passed the Jobs Act (Pub. L. 111-240, 
124 Stat. 2504, September 27, 2010), (Jobs Act) requiring SBA to review 
all size standards every five years and make necessary adjustments to 
reflect current industry and market conditions. In accordance with the 
Jobs Act, in early 2016 SBA completed the first 5-year review of all 
size standards--except those for agricultural enterprises for which 
size standards were previously set by Congress--and made appropriate 
adjustments to size standards for a number of industries to reflect 
current industry and Federal market conditions.
    During the previous 5-year comprehensive review SBA reviewed the 
receipts-based size standards for sixteen (16) industries and two (2) 
exceptions within NAICS Sector 11 (Agriculture, Forestry, Fishing and 
Hunting); four (4) industries within Sector 21 (Quarrying, and Oil and 
Gas Extraction), Subsector 213 (Support Activity for Mining); three (3) 
industries in Sector 22 (Utilities) and thirty-one (31) industries and 
one (1) exception in Sector 23 (Construction). These reviews of 
receipts-based size standards occurred during October 2010 to December 
2013. SBA's analyses of the relevant industry and Federal contracting 
data available at that time supported lowering size standards for 
twenty-eight (28) industries in Sector 23 and four (4) industries and 
two (2) exceptions in Sector 11. However, taking into consideration 
economic conditions at the time, SBA decided to either retain all size 
standards for which the industry analysis suggested a lower size 
standard at existing levels or bring them up to the relevant common 
size standard. In the final rules, SBA increased receipts-based size 
standards for nineteen (19) of all industries reviewed, including 
eleven (11) industries in Sector 11 (78 FR 37398, June 20, 2013); three 
(3) industries in Sector 21 (78 FR 37404, June 20, 2013); three (3) 
industries in Sector 22 (78 FR 77343, December 23, 2013); and one (1) 
industry and one (1) exception in Sector 23 (78 FR 77334, December 23, 
2013). SBA retained the existing size standards for the remaining 
thirty-six (36) industries and two (2) exceptions in these sectors. 
Table 1, Size Standards Revisions During the First 5-Year Review, 
provides a summary of these revisions by NAICS sector.

[[Page 62240]]



                        Table 1--Size Standards Revisions During the First 5-Year Review
----------------------------------------------------------------------------------------------------------------
                                                    Number  of      Number  of      Number  of      Number  of
                                                       size            size            size            size
         NAICS sector              Sector name       standards       standards       standards       standards
                                                     reviewed        increased        lowered       maintained
----------------------------------------------------------------------------------------------------------------
11............................  Agriculture,                  18              11               0               7
                                 Forestry,
                                 Fishing and
                                 Hunting.
21............................  Mining,                        4               3               0               1
                                 Quarrying, and
                                 Oil and Gas
                                 Extraction.
22............................  Utilities.......               3               3               0               0
23............................  Construction....              32               2               0              30
                                                 ---------------------------------------------------------------
    All Sectors...............  ................              57              19               0              38
----------------------------------------------------------------------------------------------------------------

    Currently, there are twenty-seven (27) different size standards 
levels covering 1,023 NAICS industries and 14 subindustry activities 
(commonly known as ``exceptions'' in SBA's table of size standards). 
Sixteen (16) of these size levels are based on average annual receipts, 
nine (9) are based on average number of employees, and two (2) are 
based on other measures.
    Section 1831 of the National Defense Authorization Act for Fiscal 
Year 2017 (``NDAA 2017'') (Pub. L. 114-328, December 23, 2016) directed 
SBA to establish size standards for all agricultural enterprises in the 
same manner as for other industries and to include them in the 5-year 
rolling review procedures established under section 1344(a) of the Jobs 
Act. Accordingly, in this proposed rule, SBA has also reviewed and 
proposed revisions to size standards for all agricultural industries, 
including 46 industries that are being reviewed for the first time. As 
stated above, historically, the size standards for most agricultural 
industries were established by statute.
    SBA also adjusts its monetary-based size standards for inflation at 
least once every five years. An interim final rule on SBA's latest 
inflation adjustment to size standards, effective August 19, 2019, was 
published in the Federal Register on July 18, 2019 (84 FR 34261). SBA 
also updates its size standards every five years to adopt the Office of 
Management and Budget's (OMB) quinquennial NAICS revisions to its table 
of small business size standards. Effective October 1, 2017, SBA 
adopted the OMB's 2017 NAICS revisions to its size standards (82 FR 
44886, September 27, 2017).
    This proposed rule is one of a series of proposed rules that will 
review size standards of industries grouped by various NAICS sectors. 
Rather than review all size standards at one time, SBA is reviewing 
size standards by grouping industries within various NAICS sectors that 
use the same size measure (i.e., employees or receipts). In the current 
review, SBA will review size standards in six (6) groups of NAICS 
sectors. (In the prior review, SBA reviewed size standards mostly on a 
sector-by-sector basis.) Once SBA completes its review of size 
standards for a group of sectors, the Agency issues for public comments 
a proposed rule to revise size standards for those industries based on 
the latest available data and other factors deemed relevant by the 
SBA's Administrator.
    Below is a discussion of SBA's revised ``Size Standards 
Methodology'' (Methodology), available at www.sba.gov/size, for 
establishing, reviewing, or modifying receipts-based size standards 
that SBA has applied to this proposed rule. SBA examines the structural 
characteristics of an industry as a basis to assess industry 
differences and the overall degree of competitiveness of an industry 
and of firms within the industry. Industry structure is typically 
examined by analyzing four primary factors--average firm size, degree 
of competition within an industry, start-up costs and entry barriers, 
and distribution of firms by size. To assess the ability of small 
businesses to compete for Federal contracting opportunities under the 
current size standards, as the fifth primary factor, SBA also examines, 
for each industry averaging $20 million or more in average annual 
Federal contract dollars, the small business share in Federal contract 
dollars relative to the small business share in total industry's 
receipts. When necessary, SBA also considers other secondary factors 
that are relevant to the industries and the interests of small 
businesses, including impacts of size standards changes on small 
businesses.

Size Standards Methodology

    SBA has recently revised its Methodology for establishing, 
reviewing, or modifying size standards when necessary. See the 
notification in the April 11, 2019, edition of the Federal Register (84 
FR 14587). The revised methodology is available on SBA's size standards 
web page at www.sba.gov/size. Prior to finalizing the revised 
Methodology, SBA issued a notification in the April 27, 2018 edition of 
the Federal Register (83 FR 18468) to solicit comments from the public 
and notify stakeholders of the proposed changes to the Methodology. SBA 
considered all public comments in finalizing the revised Methodology. 
For a summary of comments and SBA's responses, refer to the SBA's April 
11, 2019, Federal Register notification.
    The revised Methodology represents a major change from the previous 
methodology, which was issued on October 21, 2009 (74 FR 53940). 
Specifically, in its revised Methodology SBA is replacing the 
``anchor'' approach applied in the previous methodology with a 
``percentile'' approach for evaluating differences in characteristics 
among various industries. Under the ``anchor'' approach, SBA generally 
evaluated the characteristics of individual industries relative to the 
average characteristics of industries with the anchor size standard to 
determine whether they should have a higher or a lower size standard 
than the anchor. In the ``percentile'' approach, SBA ranks each 
industry among all industries with the same measure of size standards 
(such as receipts or employees) in terms of four primary industry 
factors, discussed in the Industry Analysis subsection below. The 
``percentile'' approach is explained more fully elsewhere in this 
proposed rule. For a more detailed explanation please see the revised 
methodology at www.sba.gov/size. Additionally, as the fifth factor, SBA 
evaluates the difference between the small business share in Federal 
contract dollars and the small business share in total industry's 
receipts to compute the size standard for the Federal contracting 
factor. The overall size standard for an industry is then obtained by 
averaging all size standards supported by each primary factor. The 
evaluation of the Federal contracting factor is explained more fully 
elsewhere in this proposed rule.
    SBA does not apply all aspects of its Methodology to all proposed 
rules because not all features are relevant for

[[Page 62241]]

every industry covered by each proposed rule. For example, since all 
industries covered by this proposed rule have receipts-based size 
standards, the Methodology described in this proposed rule applies only 
to establishing, reviewing, or modifying receipts-based size standards. 
SBA's Methodology is available on its website at www.sba.gov/size.

Industry Analysis

    Congress granted SBA's Administrator discretion to establish 
detailed small business size standards (15 U.S.C. 632(a)(2)). 
Specifically, 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 establishing, reviewing, or modifying small business size 
standards. In addition, SBA considers current economic conditions, its 
mission and program objectives, the Administration's current policies, 
impacts on small businesses under current size and proposed or revised 
size standards, suggestions from industry groups and Federal agencies, 
and public comments on the proposed rule. SBA also examines whether a 
size standard based on industry and other relevant data successfully 
excludes businesses that are dominant in the industry.
    The goal of SBA's size standards review is to determine whether its 
existing small business size standards reflect the current industry 
structure and Federal market conditions and revise them when the latest 
available data suggest that revisions are warranted. In the past, SBA 
compared the characteristics of each industry with the average 
characteristics of a group of industries associated with the ``anchor'' 
size standard. For example, in the first 5-year comprehensive review of 
size standards under the Jobs Act, $7 million (now $8.0 million due to 
the inflation adjustment in 2019; see 84 FR 34261 (July 18, 2019)) was 
considered the ``anchor'' for receipts-based size standards and 500 
employees was the ``anchor'' for employee-based size standards. If the 
characteristics of a specific industry under review were similar to the 
average characteristics of industries in the anchor group, SBA 
generally adopted the anchor size standard for that industry. If the 
specific industry's characteristics were significantly different from 
those in the anchor group, SBA assigned a size standard that was higher 
or lower than the anchor. To determine a size standard above or below 
the anchor size standard, SBA evaluated the characteristics of a second 
comparison group of industries with higher size standards. For 
industries with receipts-based standards, the second comparison group 
consisted of industries with size standards between $23 million and 
$35.5 million, with the weighted average size standard for the group 
equaling $29 million. For manufacturing industries and other industries 
with employee-based size standards (except for Wholesale Trade and 
Retail Trade), the second comparison group included industries with a 
size standard of 1,000 employees or 1,500 employees, with the weighted 
average size standard of 1,323 employees. Using the anchor size 
standard and average size standard for the second comparison group, SBA 
computed a size standard for an industry's characteristic (factor) 
based on the industry's position for that factor relative to the 
average values of the same factor for industries in the anchor and 
second comparison groups.
    Under the ``percentile'' approach, for each industry factor, an 
industry is ranked and compared with the 20th percentile and 80th 
percentile values of that factor among the industries sharing the same 
measure of size standards (i.e., receipts or employees). Combining that 
result with the 20th percentile and 80th percentile values of size 
standards among the industries with the same measure of size standards, 
SBA computes a size standard supported by each industry factor for each 
industry. In the previous Methodology, comparison industry groups were 
predetermined independent of the data, while in the revised Methodology 
they are established using the actual data. A more detailed description 
of the percentile method is provided in SBA's Methodology, available at 
www.sba.gov/size.
    The primary factors that SBA evaluates to examine industry 
structure 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, small business success in 
receiving Federal contracting assistance under the current size 
standards. Specifically, for the Federal contracting factor, SBA 
examines the small business share of Federal contract dollars relative 
to small business share of total receipts within an industry. These 
are, generally, the five most important factors SBA examines when 
establishing, reviewing, or revising a size standard for an industry. 
However, SBA will also consider and evaluate other secondary factors 
that it believes are relevant to a particular industry (such as 
technological changes, growth trends, SBA financial assistance, other 
program factors). 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 proposed 
rules also provide important additional information. SBA thoroughly 
reviews all public comments before making a final decision on its 
proposed revisions to size standards. Below are brief descriptions of 
each of the five primary factors that SBA has evaluated for each 
industry being reviewed in this proposed rule. A more detailed 
description of this analysis is provided in the SBA's Methodology, 
available at 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 summation of all the receipts of 
the firms in an industry multiplied by their share of receipts in the 
industry. 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. The size standard 
supported by average firm size is obtained by averaging size standards 
supported by simple average firm size and weighted average firm size.
    If the average firm size of an industry is higher than the average 
firm size for most other industries, this would generally support a 
size standard higher than the size standards for other industries. 
Conversely, if the industry's average firm size is lower than that of 
most other industries, it would provide a basis to assign a lower size 
standard as compared to size standards for most other industries.
    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 firms entering an industry under review have greater 
capital requirements than firms in most other industries, all other 
factors remaining the same, this would be a basis for a higher size 
standard.

[[Page 62242]]

Conversely, if the industry has smaller capital needs compared to most 
other industries, a lower size standard would be considered 
appropriate.
    Given the lack of actual data on startup costs and entry barriers 
by industry, SBA uses average assets as a proxy for startup costs and 
entry barriers. 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, available at https://rmau.org/. 
SBA then applies these ratios to the average receipts of firms in that 
industry obtained from the Economic Census tabulation. An industry with 
average assets that are significantly higher than most other industries 
is likely to have higher startup costs; this in turn will support a 
higher size standard. Conversely, an industry with average assets that 
are similar to or lower than most other industries is likely to have 
lower startup costs; this will support either lowering or maintaining 
the size standard.
    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 ``4-firm concentration ratio,'' a commonly used economic 
measure of market competition. Using the 4-firm concentration ratio, 
SBA compares the degree of concentration within an industry to the 
degree of concentration of the other industries with the same measure 
of size standards. If a significantly higher share of economic activity 
within an industry is concentrated among the four largest firms 
compared to most other industries, all else being equal, SBA would set 
a size standard that is relatively higher than for most other 
industries. Conversely, if the market share of the four largest firms 
in an industry is appreciably lower than the similar share for most 
other industries, the industry will be assigned a size standard that is 
lower than those for most other industries.
    4. Distribution of firms by size. SBA examines the shares of 
industry total receipts accounted for by firms of different receipts 
and employment sizes in an industry. This is an additional factor SBA 
considers in assessing competition within an industry besides the 4-
firm concentration ratio. If the preponderance of an industry's 
economic activity is attributable to smaller firms, this generally 
indicates that small businesses are competitive in that industry, which 
would support adopting a smaller size standard. A higher size standard 
would be supported for an industry in which the distribution of firms 
indicates that most of the economic activity is concentrated among the 
larger firms.
    Concentration is a measure of inequality of distribution. To 
determine the degree of inequality of distribution in an industry, SBA 
computes the Gini coefficient, using 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, see 
SBA's Methodology on its website at 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 degree of inequality of distribution for an 
industry under review with other industries with the same type of size 
standards. If an industry shows a higher degree of inequality of 
distribution (hence a higher Gini coefficient value) compared to most 
other industries in the group this would, all else being equal, warrant 
a size standard that is higher than the size standards assigned to most 
other industries. Conversely, an industry with lower degree of 
inequality (i.e., a lower Gini coefficient value) than most others will 
be assigned a lower size standard relative to others.
    5. Federal contracting. As the fifth factor, SBA examines the 
success small businesses are having in winning Federal contracts under 
the current size standard as well as the possible impact a size 
standard change may have on Federal small business contracting 
opportunities. The Small Business Act requires the Federal government 
to ensure that small businesses receive a ``fair proportion'' of 
Federal contracts. The legislative history also discusses the 
importance of size standards in Federal contracting. To incorporate the 
Federal contracting factor in the size standards analysis, SBA 
evaluates small business participation in Federal contracting in terms 
of the share of total Federal contract dollars awarded to small 
businesses relative to the small business share of industry's total 
receipts. In general, if the share of Federal contract dollars awarded 
to small businesses in an industry is significantly smaller than the 
small business share of total industry's receipts, all else remaining 
the same, a justification would exist for considering a size standard 
higher than the current size standard. In cases where small business 
share of the Federal market is already appreciably high relative to the 
small business share of the overall market, SBA generally assumes that 
the existing size standard is adequate with respect to the Federal 
contracting factor.
    The disparity between the small business Federal market share and 
industry-wide small business share may be due to various factors, such 
as extensive administrative and compliance requirements associated with 
Federal contracts, the different skill set required to perform 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 market conditions.
    Besides the impact on Federal contracting, SBA also examines 
impacts on SBA's loan programs both under the current and revised size 
standards.

Sources of Industry and Program Data

    SBA's primary source of industry data used in this proposed rule 
for evaluating industry characteristics and developing size standards 
is a special tabulation of the Economic Census from the U.S. Census 
Bureau (www.census.gov/econ/census). The tabulation based on the 2012 
Economic Census is the latest available. The special tabulation 
provides industry data on the number of firms, number of 
establishments, number of employees, annual payroll, and annual 
receipts of companies by Industry (6-digit level), Industry Group (4-
digit level), Subsector (3-digit level), and Sector (2-digit level). 
These data are arrayed by various classes of firms' size based on the 
overall number of employees and receipts of the entire enterprise (all 
establishments and affiliated firms) from all industries. The special 
tabulation also contains information for different levels of NAICS 
categories on average and median firm size in terms of both receipts 
and employment, total receipts generated by the four and eight largest 
firms, the Herfindahl-Hirschman Index (HHI), the Gini coefficient, and 
size distributions of firms by various receipts and employment size 
groupings.
    In some cases, where data were not available due to disclosure 
prohibitions in the Census Bureau's tabulation, SBA

[[Page 62243]]

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's analysis was based only on those 
factors for which data were available or estimates of missing values 
were possible.
    To evaluate some industries that are not covered by the Economic 
Census, SBA used a similar special tabulation of the latest County 
Business Patterns (CBP) published by the U.S. Census Bureau 
(www.census.gov/programs-surveys/cbp.html). Similarly, to evaluate 
industries in NAICS Sector 11 that are also not covered by the Economic 
Census and CBP, SBA evaluated a similar special tabulation based on the 
2012 Census of Agriculture (www.nass.usda.gov) from the National 
Agricultural Statistics Service (NASS). Besides the Economic Census, 
Agricultural Census and CBP tabulations, SBA also evaluates relevant 
industry data from other sources when necessary, especially for 
industries that are not covered by the Economic Census or CBP. These 
include the Quarterly Census of Employment and Wages (QCEW, also known 
as ES-202 data) (www.bls.gov/cew/) and Business Employment Dynamics 
(BED) data (www.bls.gov/bdm/) from the U.S. Bureau of Labor Statistics. 
Similarly, to evaluate certain financial industries that have assets-
based size standards, SBA examines the data from the Statistics on 
Depository Institutions (SDI) database (www5.fdic.gov/sdi/main.asp) of 
the Federal Deposit Insurance Corporation (FDIC). Finally, to evaluate 
the capacity component of the Petroleum Refiners (NAICS 324110) size 
standard, SBA evaluates the petroleum production data from the Energy 
Information Administration (www.eia.gov).
    To calculate average assets, SBA used sales to total assets ratios 
from the Risk Management Association's Annual eStatement Studies, 2016-
2018 (https://rmau.org/). To evaluate Federal contracting trends and 
evaluate two exceptions in Sector 11 and one exception in Sector 23, 
SBA examined the data on Federal prime contract awards from the Federal 
Procurement Data System--Next Generation (FPDS-NG) (www.fpds.gov) for 
fiscal years 2016-2018. To assess the impact on financial assistance to 
small businesses, SBA examined its internal data on 7(a) and 504 loan 
programs for fiscal years 2016-2018. For some portion of impact 
analysis, SBA also evaluated the data from the System of Award 
Management (www.sam.gov).
    Data sources and estimation procedures SBA uses in its size 
standards analysis are documented in detail in SBA's Methodology, which 
is available at 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 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 or revised size standard as well 
as the distribution of firms by size. Market share and size 
distribution 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 includes a dominant firm, SBA will consider a lower size 
standard to exclude the dominant firm from being defined as small.

Selection of Size Standards

    In the 2009 Methodology SBA applied to the first 5-year 
comprehensive review of size standards, SBA adopted a fixed number of 
size standards levels as part of its effort to simplify size standards. 
In response to public comments to the 2009 Methodology white paper, and 
the 2013 amendment to the Small Business Act (section 3(a)(8)) under 
section 1661 of the National Defense Authorization Act for Fiscal Year 
2013 (``NDAA 2013'') (Pub. L. 112-239, January 2, 2013), in the revised 
Methodology SBA relaxed the limitation on the number of small business 
size standards. Specifically, section 1661 of NDAA 2013 states ``SBA 
cannot limit the number of size standards, and shall assign the 
appropriate size standard to each industry identified by NAICS.''
    In the revised Methodology, SBA calculates a separate size standard 
for each NAICS industry. However, to account for errors and limitations 
associated with various data SBA evaluates in the size standards 
analysis, SBA rounds the calculated size standard value for a receipts-
based size standard to the nearest $500,000, except for agricultural 
industries in Subsectors 111 and 112 for which the calculated size 
standards will be rounded to the nearest $250,000. This rounding 
procedure is applied both in calculating a size standard for each of 
the five primary factors and in calculating the overall size standard 
for the industry.
    As a policy decision, SBA continues to maintain the minimum and 
maximum levels for both receipts and employee-based size standards. 
Accordingly, SBA will not generally propose or adopt a size standard 
that is either below the minimum level or above the maximum, even 
though the calculations yield values below the minimum or above the 
maximum. The minimum size standard reflects the size an established 
small business should be to have adequate capabilities and resources to 
be able to compete for and perform Federal contracts (but does not 
account for small businesses that are newly formed or just starting 
operations). On the other hand, the maximum size standard represents 
the level above which businesses, if qualified as small, would 
outcompete much smaller businesses when accessing Federal assistance.
    With respect to receipts-based size standards, SBA has established 
$6 million and $41.5 million, respectively, as the minimum and maximum 
size standard levels (except for most agricultural industries in NAICS 
Subsectors 111 and 112). These levels reflect the current minimum of 
$6.0 million and the current maximum of $41.5 million. The industry 
data suggests that $6 million minimum and $41.5 million maximum size 
standards would be too high for agricultural industries. Accordingly, 
SBA has established $1 million as the minimum size standard and $5 
million as the maximum size standard for industries in Subsector 111 
(Crop Production) and Subsector 112 (Animal Production and 
Aquaculture).

Evaluation of Industry Factors

    As mentioned earlier, to assess the appropriateness of the current 
size standards SBA evaluates the structure of each industry in terms of 
four economic characteristics or factors, namely average firm size, 
average assets size as a proxy for startup costs and entry barriers, 
the 4-firm concentration ratio as a measure of industry competition, 
and size distribution of firms using the Gini coefficient. For each 
size standard type (i.e., receipts-based or employee-based) SBA ranks 
industries both in terms of each of the four industry factors and in 
terms of the existing size standard and computes the 20th percentile 
and 80th percentile values for both. SBA then evaluates each industry 
by comparing its value for each industry factor to the 20th percentile 
and 80th percentile values for the corresponding

[[Page 62244]]

factor for industries under a particular type of size standard.
    If the characteristics of an industry under review within a 
particular size standard type are similar to the average 
characteristics of industries within the same size standard type in the 
20th percentile, SBA will consider adopting as an appropriate size 
standard for that industry the 20th percentile value of size standards 
for those industries. For each size standard type, if the industry's 
characteristics are similar to the average characteristics of 
industries in the 80th percentile, SBA will assign a size standard that 
corresponds to the 80th percentile in the size standard rankings of 
industries. A separate size standard is established for each factor 
based on the amount of differences between the factor value for an 
industry under a particular size standard type and 20th percentile and 
80th percentile values for the corresponding factor for all industries 
in the same type. Specifically, the actual level of the new size 
standard for each industry factor is derived by a linear interpolation 
using the 20th percentile and 80th percentile values of that factor and 
corresponding percentiles of size standards. Each calculated size 
standard is bounded between the minimum and maximum size standards 
levels, as discussed before. As noted earlier, the calculated value for 
a receipts-based size standard for each industry factor is rounded to 
the nearest $500,000, except for industries in Subsectors 111 and 112 
for which a calculated size standard is rounded to the nearest 
$250,000.
    Table 2, 20th and 80th Percentiles of Industry Factors for 
Receipts-based Size Standards, shows the 20th percentile and 80th 
percentile values for average firm size (simple and weighted), average 
assets size, 4-firm concentration ratio, and Gini coefficient for 
industries with receipts-based size standards.

            Table 2--20th and 80th Percentiles of Industry Factors for Receipts-Based Size Standards
----------------------------------------------------------------------------------------------------------------
                                                     Weighted
                                  Simple average      average     Average assets      4-firm           Gini
     Industries/percentiles        receipts size   receipts size      size ($      concentration    coefficient
                                    ($ million)     ($ million)      million)        ratio (%)
----------------------------------------------------------------------------------------------------------------
Industries, excluding Subsectors
 111 and 112
    20th percentile.............            0.83           19.42            0.34             7.9           0.686
    80th percentile.............            7.52          830.65            5.19            42.4           0.834
Industries in Subsectors 111 and
 112
    20th percentile.............            0.06            1.48            0.07             1.7           0.608
    80th percentile.............            0.83           13.32            0.88            12.3           0.908
----------------------------------------------------------------------------------------------------------------

Estimation of Size Standards Based on Industry Factors

    An estimated size standard supported by each industry factor is 
derived by comparing its value for a specific industry to the 20th 
percentile and 80th percentile values for that factor. If an industry's 
value for a particular factor is near the 20th percentile value in the 
distribution, the supported size standard will be one that is close to 
the 20th percentile value of size standards for industries in the size 
standards group, which is $8.0 million. If a factor for an industry is 
close to the 80th percentile value of that factor, it would support a 
size standard that is close to the 80th percentile value in the 
distribution of size standards, which is $35.0 million. For a factor 
that is within, above, or below the 20-80th percentile range, the size 
standard is calculated using linear interpolation based on the 20th 
percentile and 80th percentile values for that factor and the 20th 
percentile and 80th percentile values of size standards.
    For example, if an industry's simple average receipts are $1.9 
million, that would support a size standard of $12.5 million. According 
to Table 2, the 20th percentile and 80th percentile values of average 
receipts are $0.83 million and $7.52 million, respectively. The $1.9 
million is 15.9 percent between the 20th percentile value ($0.83 
million) and the 80th percentile value ($7.52 million) of simple 
average receipts (($1.9 million - $0.83 million) / ($7.52 million - 
$0.83 million) = 0.159 or 15.9%). Applying this percentage to the 
difference between the 20th percentile value ($8 million) and 80th 
percentile ($35.0 million) value of size standards and then adding the 
result to the 20th percentile size standard value ($8.0 million) yields 
a calculated size standard value of $12.32 million ([{$35.0 million - 
$8.0 million{time}  * 0.159] + $8.0 million = $12.32 million). The 
final step is to round the calculated $12.32 million size standard to 
the nearest $500,000, which in this example yields $12.5 million. This 
procedure is applied to calculate size standards supported by other 
industry factors.
    Detailed formulas involved in these calculations are presented in 
SBA's Methodology which is available at www.sba.gov/size.

Derivation of Size Standards Based on Federal Contracting Factor

    Besides industry structure, SBA also evaluates Federal contracting 
data to assess the success of small businesses in getting Federal 
contracts under the existing size standards. For each industry with $20 
million or more in annual Federal contract dollars, SBA evaluates the 
small business share of total Federal contract dollars relative to the 
small business share of total industry receipts. All other factors 
being equal, if the share of Federal contracting dollars awarded to 
small businesses in an industry is significantly less than the small 
business share of that industry's total receipts, a justification would 
exist for considering a size standard higher than the current size 
standard. Conversely, if the small business share of Federal 
contracting activity is near or above the small business share in total 
industry receipts, this will support the current size standard.
    SBA increases the existing size standards by certain percentages 
when the small business share of total industry receipts exceeds the 
small business share of total Federal contract dollars by 10 or more 
percentage points. Proposed percentage increases generally reflect 
receipts levels needed to bring the small business share of Federal 
contracts on par with the small business share of industry receipts. 
These proposed percentage increases for receipts-based size standards 
are given in Table 3, Proposed Adjustments to Size Standards Based on 
Federal Contracting Factor.

[[Page 62245]]



               Table 3--Proposed Adjustments to Size Standards Based on Federal Contracting Factor
----------------------------------------------------------------------------------------------------------------
                                        Percentage difference between the small business shares of total Federal
                                             contract dollars in an industry and of total industry receipts
            Size standards            --------------------------------------------------------------------------
                                                >-10%                - 10% to - 30%               <- 30%
----------------------------------------------------------------------------------------------------------------
Receipts-based standards
    <$15 million.....................  No change..............  Increase 30%...........  Increase 60%
    $15 million to < $25 million.....  No change..............  Increase 20%...........  Increase 40%
    $25 million to < $41.5 million...  No change..............  Increase 15%...........  Increase 25%
----------------------------------------------------------------------------------------------------------------

    For example, if an industry with the current size standard of $8.0 
million had an average of $50 million in Federal contracting dollars, 
of which 15 percent went to small businesses, and if that small 
businesses accounted for 40 percent of total receipts of that industry, 
the small business share of total Federal contract dollars would be 25 
percent less than the small business share of total industry receipts 
(40% - 15%). According to the above rule, the new size standard for the 
Federal contracting factor for that industry would be set by 
multiplying the current $8.0 million standard by 1.3 (i.e., 30% 
increase) and then by rounding the result to the nearest $500,000, 
yielding a size standard of $10.5 million.
    SBA evaluated the small business share of total Federal contract 
dollars for the thirty-one (31) industries covered by this proposed 
rule--five (5) in Sector 11, one (1) in Sector 21, three (3) in Sector 
22, and twenty-two (22) in Sector 23)--that had $20 million or more in 
average annual Federal contract dollars during fiscal years 2016-2018. 
The Federal contracting factor was significant (i.e., the difference 
between the small business share of total industry receipts and small 
business share of Federal contracting dollars was 10 percentage points 
or more) in seven (7) of these industries, prompting an upward 
adjustment of their existing size standards based on that factor. For 
the remaining twenty-four (24) industries that averaged $20 million or 
more in average annual contract dollars, the Federal contracting factor 
was not significant, and the existing size standard was applied for 
that factor. For industries with less than $20 million in average 
annual contract dollars, no size standard was calculated for the 
Federal contracting factor.

Derivation of Overall Industry Size Standard

    The SBA's Methodology presented above results in five separate size 
standards based on evaluation of the five primary factors (i.e., four 
industry factors and one Federal contracting factor). SBA typically 
derives an industry's overall size standard by assigning equal weights 
to size standards supported by each of these five factors. However, if 
necessary, SBA's Methodology would allow assigning different weights to 
some of these factors in response to its policy decisions and other 
considerations. For detailed calculations, see SBA's Methodology, 
available on its website at www.sba.gov/size.

Calculated Size Standards Based on Industry and Federal Contracting 
Factors

    Table 4, Size Standards Supported by Each Factor for Each Industry 
(Receipts), below, shows the results of analyses of industry and 
Federal contracting factors for each industry and subindustry 
(exception) covered by this proposed rule. NAICS industries in columns 
2, 3, 4, 5, 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. Column 9 shows a calculated new size standard for each 
industry. This is the average of the size standards supported by each 
factor, rounded to the nearest $500,000 for non-agriculture industries 
and rounded to the nearest $250,000 for agriculture industries. 
Analytical details involved in the averaging procedure are described in 
SBA's Methodology, which is available at www.sba.gov/size. For 
comparison with the calculated new size standards, the current size 
standards are in column 10 of Table 4.

                                      Table 4--Size Standards Supported by Each Factor for Each Industry (Receipts)
                                        [Upper value = calculated factor, lower value = size standard supported]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                     Simple      Weighted     Average                                            Calculated    Current
  NAICS code  NAICS industry                        average      average    assets size   Four-firm       Gini       Federal        size         size
             title                    Type         firm size    firm size        ($       ratio  (%)  coefficient    contract     standard     standard
                                                  ($ million)  ($ million)    million)                             factor  (%)  ($ million)  ($ million)
(1)                             (2).............          (3)          (4)          (5)          (6)          (7)          (8)          (9)         (10)
--------------------------------------------------------------------------------------------------------------------------------------------------------
111110 Soybean Farming........  Factor..........         $0.2         $0.9         $0.1          0.3        0.663  ...........        $2.00        $1.00
                                Size Std........         2.25         1.75         1.75         1.50         2.25
111120 Oilseed (except          Factor..........          0.3          1.1          0.2          5.5        0.544  ...........         2.00         1.00
 Soybean) Farming.              Size Std........         2.75         1.75         2.00         2.75         1.25
111130 Dry Pea and Bean         Factor..........          0.3          1.2          0.2          7.5        0.630  ...........         2.50         1.00
 Farming.                       Size Std........         2.50         1.75         2.00         3.25         2.00
111140 Wheat Farming..........  Factor..........          0.2          0.9          0.2          0.4        0.610  ...........         2.00         1.00
                                Size Std........         2.25         1.75         2.25         1.50         1.75
111150 Corn Farming...........  Factor..........          0.4          1.7          0.7          0.2        0.606  ...........         2.25         1.00
                                Size Std........         2.75         1.75         3.50         1.50         1.75
111160 Rice Farming...........  Factor..........          0.8          1.8          0.5          1.5        0.469  ...........         2.25         1.00
                                Size Std........         4.00         1.75         3.00         1.75         1.00
111190 Other Grain Farming      Factor..........          0.5          1.8          0.4          0.3        0.567  ...........         2.00         1.00
 (includes NAICS 111191 and     Size Std........         3.25         1.75         2.75         1.50         1.50
 111199).
111211 Potato Farming.........  Factor..........          1.6         10.6          1.3          5.8        0.756  ...........         3.75         1.00
                                Size Std........         5.00         3.75         5.00         2.75         3.00

[[Page 62246]]

 
111219 Other Vegetable (except  Factor..........          0.3         17.8          0.2          3.5        0.943  ...........         3.25         1.00
 Potato) and Melon Farming.     Size Std........         2.50         5.00         2.00         2.25         4.50
111310 Orange Groves..........  Factor..........          0.3         12.2          0.4         11.0        0.856  ...........         3.50         1.00
                                Size Std........         2.50         4.00         2.75         4.00         3.75
111320 Citrus (except Orange)   Factor..........          0.2         11.1          0.3         22.7        0.892  ...........         3.75         1.00
 Groves.                        Size Std........         2.25         3.75         2.50         5.00         4.00
111331 Apple Orchards.........  Factor..........          0.3         16.6          0.4         14.4        0.909  ...........         4.00         1.00
                                Size Std........         2.50         5.00         3.00         4.75         4.25
111332 Grape Vineyards........  Factor..........          0.4         13.9          0.8          4.1        0.877  ...........         3.50         1.00
                                Size Std........         2.75         4.25         4.00         2.25         4.00
111333 Strawberry Farming.....  Factor..........          1.2         19.5          1.7         15.1        0.915  ...........         4.75         1.00
                                Size Std........         5.00         5.00         5.00         5.00         4.25
111334 Berry (except            Factor..........          0.1          7.1          0.2         11.1        0.900  ...........         3.25         1.00
 Strawberry) Farming.           Size Std........         2.00         3.00         2.00         4.00         4.25
111335 Tree Nut Farming.......  Factor..........          0.3         12.0          0.6          4.5        0.893  ...........         3.25         1.00
                                Size Std........         2.50         4.00         3.25         2.50         4.00
111336 Fruit and Tree Nut       Factor..........          0.5         16.5          1.0         31.0        0.955  ...........         4.50         1.00
 Combination Farming.           Size Std........         3.00         5.00         4.50         5.00         4.75
111339 Other Noncitrus Fruit    Factor..........          0.1          6.8          0.2          7.8        0.869  ...........         3.00         1.00
 Farming.                       Size Std........         2.00         2.75         2.00         3.25         4.00
111410 Food Crops Grown Under   Factor..........          0.5         29.1          0.2         19.6        0.950  ...........         4.00         1.00
 Cover (includes NAICS 111411   Size Std........         3.25         5.00         2.25         5.00         4.50
 and 111419).
111421 Nursery and Tree         Factor..........          0.2          7.6          0.1          2.5        0.894  ...........         2.75         1.00
 Production.                    Size Std........         2.25         3.00         2.00         2.00         4.25
111422 Floriculture Production  Factor..........          0.3         12.8          0.2          5.8        0.878  ...........         3.25         1.00
                                Size Std........         2.75         4.25         2.25         2.75         4.00
111910 Tobacco Farming........  Factor..........          0.2          1.5          0.2          3.9        0.666  ...........         2.25         1.00
                                Size Std........         2.25         1.75         2.00         2.25         2.25
111920 Cotton Farming.........  Factor..........          0.5          7.2          0.5          6.6        0.572  ...........         2.75         1.00
                                Size Std........         3.25         3.00         3.00         3.00         1.50
111930 Sugarcane Farming......  Factor..........          2.6         34.0          2.4         28.5        0.719  ...........         4.50         1.00
                                Size Std........         5.00         5.00         5.00         5.00         2.75
111940 Hay Farming............  Factor..........          0.0          1.5          0.0          1.7        0.840  ...........         2.25         1.00
                                Size Std........         1.75         1.75         1.50         1.75         3.75
111990 All Other Crop Farming   Factor..........          0.1          4.6          0.0          1.7        0.973        -20.6         2.25         1.00
 (includes NAICS 111991,        Size Std........         1.75         2.50         1.75         1.75         4.75         1.25
 111992 and 111998).
112111 Beef Cattle Ranching     Factor..........          0.1          3.1          0.1          1.0        0.859  ...........         2.25         1.00
 and Farming.                   Size Std........         1.75         2.00         1.75         1.50         3.75
112112 Cattle Feedlots........  Factor..........          2.8         63.3          2.0          3.9        0.907  ...........        19.50         8.00
                                Size Std........        16.00         9.50        17.00         6.00        41.50
112120 Dairy Cattle and Milk    Factor..........          0.9          9.5          1.5          1.3        0.697  ...........         3.25         1.00
 Production.                    Size Std........         4.50         3.50         5.00         1.75         2.50
112210 Hog and Pig Farming....  Factor..........          1.0         11.4          0.8          2.7        0.803  ...........         3.50         1.00
                                Size Std........         5.00         3.75         4.00         2.00         3.50
112310 Chicken Egg Production.  Factor..........          0.3         17.8          0.3          4.9        0.936  ...........        15.50        16.50
                                Size Std........         6.00         8.00         7.50         6.00        41.50
112320 Broilers and Other Meat  Factor..........          1.5          6.0          1.0          2.8        0.386  ...........         3.00         1.00
 Type Chicken Production.       Size Std........         5.00         2.75         4.50         2.00         1.00
112330 Turkey Production......  Factor..........          2.3          8.6          1.4          4.2        0.554  ...........         3.25         1.00
                                Size Std........         5.00         3.25         5.00         2.25         1.25
112340 Poultry Hatcheries.....  Factor..........         10.7         19.6          6.7          5.9        0.493  ...........         3.50         1.00
                                Size Std........         5.00         5.00         5.00         2.75         1.00
112390 Other Poultry            Factor..........          0.1          6.2          0.1         11.0        0.931  ...........         3.25         1.00
 Production.                    Size Std........         2.00         2.75         1.75         4.00         4.50
112410 Sheep Farming..........  Factor..........          0.0          3.1          0.0         13.4        0.906  ...........         3.00         1.00
                                Size Std........         1.50         2.00         1.50         4.50         4.25
112420 Goat Farming...........  Factor..........          0.0          0.2          0.0          4.2        0.836  ...........         2.25         1.00
                                Size Std........         1.50         1.50         1.50         2.25         3.75
112500 Aquaculture (includes    Factor..........          0.4          7.2          0.4          8.9        0.816  ...........         3.25         1.00
 NAICS 112511, 112512 and       Size Std........         2.75         3.00         2.75         3.50         3.50
 112519).
112910 Apiculture.............  Factor..........          0.0          0.7          0.0          6.5        0.882  ...........         2.75         1.00
                                Size Std........         1.75         1.50         1.75         3.00         4.00
112920 Horses and Other Equine  Factor..........          0.0          1.0          0.0          3.7        0.900  ...........         2.50         1.00
 Production.                    Size Std........         1.50         1.75         1.50         2.25         4.25
112930 Fur-Bearing Animal and   Factor..........          0.0          1.6          0.0         48.9        0.894  ...........         3.25         1.00
 Rabbit Production.             Size Std........         1.75         1.75         1.50         5.00         4.25
112990 All Other Animal         Factor..........          0.1          5.2          0.1          5.1        0.959         -6.9         2.50         1.00
 Production.                    Size Std........         1.75         2.50         1.75         2.50         4.75         1.00

[[Page 62247]]

 
113110 Timber Tract Operations  Factor..........          1.8         19.4          1.0         29.6        0.749  ...........        16.50        12.00
                                Size Std........        12.00         8.00        11.50        25.00        19.50
113210 Forest Nurseries and     Factor..........          1.4         12.5          0.7         39.2        0.748  ...........        18.00        12.00
 Gathering Forest Products.     Size Std........        10.00         8.00        10.00        32.50        19.50
114111 Finfish Fishing........  Factor..........          1.8         72.7          2.3         30.5        0.789  ...........        20.50        22.00
                                Size Std........        12.00        10.00        18.50        25.50        26.50
114112 Shellfish Fishing......  Factor..........          0.8         18.5          0.6         25.9        0.700  ...........        12.50         6.00
                                Size Std........         8.00         8.00         9.00        22.00        10.50
114119 Other Marine Fishing...  Factor..........          0.8          6.6          0.7  ...........        0.707  ...........        10.00         8.00
                                Size Std........         8.00         7.50        10.00                     12.00
114210 Hunting and Trapping...  Factor..........          0.6          9.8          0.5  ...........        0.666  ...........         7.50         6.00
                                Size Std........         7.00         7.50         9.00                      6.00
115111 Cotton Ginning.........  Factor..........          4.3         10.0          3.3         10.2        0.541  ...........        14.00        12.00
                                Size Std........        22.00         7.50        24.50        10.00         6.00
115112 Soil Preparation,        Factor..........          1.5         13.6          0.8          7.9        0.684         10.3         8.50         8.00
 Planting, and Cultivating.     Size Std........        10.50         8.00        10.50         8.00         7.50         8.00
115113 Crop Harvesting,         Factor..........          1.7          9.5          1.0         18.3        0.704  ...........        12.00         8.00
 Primarily by Machine.          Size Std........        11.50         7.50        11.50        16.00        11.50
115114 Postharvest Crop         Factor..........          9.4        191.4          6.3         24.1        0.754  ...........        27.50        30.00
 Activities (except Cotton      Size Std........        41.50        13.50        41.00        20.50        20.50
 Ginning).
115115 Farm Labor Contractors   Factor..........          1.8         15.3          1.0  ...........        0.727  ...........        12.50        16.50
 and Crew Leaders.              Size Std........        12.00         8.00        12.00                     15.50
115116 Farm Management          Factor..........          1.3         10.5          0.7         17.9        0.743  ...........        13.50         8.00
 Services.                      Size Std........        10.00         7.50        10.00        16.00        18.50
115210 Support Activities for   Factor..........          0.6         24.8          0.3  ...........        0.724         -8.9         9.50         8.00
 Animal Production.             Size Std........         7.00         8.00         7.50                     15.00         8.00
115310 Support Activities for   Factor..........          0.9         11.3          0.4         12.6        0.723         21.3        10.00         8.00
 Forestry.                      Size Std........         8.00         7.50         8.00        11.50        14.50         8.00
115310 Except, Forest Fire      Factor..........          3.7        198.9          1.6         27.6        0.867         74.7         23.5         20.5
 Suppression.                   Size Std........         19.5         17.5         15.0         23.5         41.0         20.5
115310 Except Fuels Management  Factor..........          3.7        198.9          1.6         27.6        0.867         74.7         23.5         20.5
 Services.                      Size Std........         19.5         17.5         15.0         23.5         41.0         20.5
213112 Support Activities for   Factor..........         11.5      4,184.6          9.6         34.2        0.849         10.1         38.0         41.5
 Oil and Gas Operations.        Size Std........         41.5         41.5         41.5         28.5         37.5         41.5
213113 Support Activities for   Factor..........          7.2         41.0          5.6         20.5        0.749  ...........         24.0         22.0
 Coal Mining.                   Size Std........         34.0          8.5         37.0         18.0         19.5
213114 Support Activities for   Factor..........         12.2        236.0          9.4         54.8        0.823  ...........         36.0         22.0
 Metal Mining.                  Size Std........         41.5         15.0         41.5         41.5         33.0
213115 Support Activities for   Factor..........          2.8         32.1          2.2         34.3        0.708  ...........         18.0          8.0
 Nonmetallic Minerals (except   Size Std........         16.0          8.5         18.5         28.5         12.0
 Fuels) Mining.
221310 Water Supply and         Factor..........          2.9      1,023.6          9.6         49.9        0.834        -17.0         36.0         30.0
 Irrigation Systems.            Size Std........         16.5         41.5         41.5         41.0         35.0         34.5
221320 Sewage Treatment         Factor..........          3.6        142.2         18.2         55.0        0.824         -6.9         31.0         22.0
 Facilities.                    Size Std........         19.5         12.0         41.5         41.5         33.0         22.0
221330 Steam and Air-           Factor..........         43.3        176.2         24.0         60.3        0.678         21.4         26.5         16.5
 Conditioning Supply.           Size Std........         41.5         13.0         41.5         41.5          6.5         16.5
236115 New Single-Family        Factor..........          1.3         30.8          0.7          2.6        0.667  ...........          8.0         39.5
 Housing Construction (except   Size Std........         10.0          8.5          9.5          6.0          6.0
 For-Sale Builders).
236116 New Multifamily Housing  Factor..........         10.9        121.7          3.6          9.4        0.782         -3.8         25.5         39.5
 Construction (except For-Sale  Size Std........         41.5         11.5         26.5          9.0         25.5         39.5
 Builders).
236117 New Housing For-Sale     Factor..........          5.2      1,172.3          3.5         19.9        0.818  ...........         27.5         39.5
 Builders.                      Size Std........         26.0         41.5         25.5         17.5         32.0
236118 Residential Remodelers.  Factor..........          0.7         34.6          0.2          3.4        0.667        -62.6         13.5         39.5
                                Size Std........          7.5          8.5          7.0          6.0          6.0         41.5
236210 Industrial Building      Factor..........         10.2        351.6          3.5         17.7        0.830         17.0         29.0         39.5
 Construction.                  Size Std........         41.5         19.0         25.5         15.5         34.0         39.5
236220 Commercial and           Factor..........          8.3        515.4          2.6          5.0        0.802          9.4         25.5         39.5
 Institutional Building         Size Std........         38.5         24.5         20.5          6.0         29.0         39.5
 Construction.
237110 Water and Sewer Line     Factor..........          4.1         98.2          2.0          6.5        0.756         -4.1         20.0         39.5
 and Related Structures         Size Std........         21.0         10.5         17.5          7.0         21.0         39.5
 Construction.
237120 Oil and Gas Pipeline     Factor..........         22.8        715.1         10.4         20.8        0.806          4.4         33.0         39.5
 and Related Structures         Size Std........         41.5         31.0         41.5         18.0         30.0         39.5
 Construction.
237130 Power and Communication  Factor..........          9.3        647.7          4.2         18.5        0.824          1.4         31.0         39.5
 Line and Related Structures    Size Std........         41.5         29.0         30.0         16.0         33.0         39.5
 Construction.
237210 Land Subdivision.......  Factor..........          2.7         42.4          6.8          8.1        0.782  ...........         22.0         30.0
                                Size Std........         15.5          9.0         41.5          8.0         25.5

[[Page 62248]]

 
237310 Highway, Street, and     Factor..........         12.3        285.7          6.2          6.9        0.779         24.8         28.5         39.5
 Bridge Construction.           Size Std........         41.5         17.0         40.5          7.0         25.0         39.5
237990 Other Heavy and Civil    Factor..........          7.4        458.2          3.9         20.6        0.825          7.8         29.5         39.5
 Engineering Construction.      Size Std........         34.5         22.5         28.0         18.0         33.0         39.5
237990 Except Dredging and      Factor..........         42.6        384.2         21.3         55.4        0.744          6.2         32.5         30.0
 Surface Cleanup Activities.    Size Std........         41.5         20.0         41.5         41.5       18.5.0         30.0
238110 Poured Concrete          Factor..........          1.7         53.3          0.6          4.9        0.731        -10.3         12.5         16.5
 Foundation and Structure       Size Std........         11.5          9.0          9.5          6.0         16.0         20.0
 Contractors.
238120 Structural Steel and     Factor..........          3.1         38.3          1.3          7.1        0.720         26.9         13.0         16.5
 Precast Concrete Contractors.  Size Std........         17.0          8.5         13.5          7.5         14.0         16.5
238130 Framing Contractors....  Factor..........          0.8         19.0          0.2          5.0        0.707  ...........          8.5         16.5
                                Size Std........          8.0          8.0          7.5          6.0         12.0
238140 Masonry Contractors....  Factor..........          1.0         17.1          0.3          3.1        0.717         -4.8         10.5         16.5
                                Size Std........          8.5          8.0          8.0          6.0         13.5         16.5
238150 Glass and Glazing        Factor..........          1.7         16.8          0.6          5.2        0.674  ...........          8.0         16.5
 Contractors.                   Size Std........         11.5          8.0          9.5          6.0          6.0
238160 Roofing Contractors....  Factor..........          1.7         35.2          0.6          4.4        0.694         12.0         10.0         16.5
                                Size Std........         11.5          8.5          9.0          6.0          9.5         16.5
238170 Siding Contractors.....  Factor..........          0.7         10.5          0.2          3.1        0.655  ...........          7.0         16.5
                                Size Std........          7.5          7.5          7.5          6.0          6.0
238190 Other Foundation,        Factor..........          1.6         34.7          0.5          9.9        0.732        -10.2         13.0         16.5
 Structure, and Building        Size Std........         11.0          8.5          9.0          9.5         16.5         20.0
 Exterior Contractors.
238210 Electrical Contractors   Factor..........          2.0        164.4          0.7          5.1        0.767         -1.7         13.5         16.5
 and Other Wiring Installation  Size Std........         12.5         13.0         10.0          6.0         22.5         16.5
 Contractors.
238220 Plumbing, Heating, and   Factor..........          1.7        123.8          0.5          4.1        0.737         24.0         12.0         16.5
 Air-Conditioning Contractors.  Size Std........         11.5         11.5          9.0          6.0         17.5         16.5
238290 Other Building           Factor..........          4.4        453.7          1.5         24.7        0.775         22.5         19.5         16.5
 Equipment Contractors.         Size Std........         22.5         22.5         14.0         21.0         24.0         16.5
238310 Drywall and Insulation   Factor..........          1.7         59.3          0.5          6.0        0.746  ...........         11.5         16.5
 Contractors.                   Size Std........         11.5          9.5          9.0          6.5         19.0
238320 Painting and Wall        Factor..........          0.6         60.6          0.2          6.9        0.697          0.4         10.0         16.5
 Covering Contractors.          Size Std........          7.0          9.5          7.0          7.0         10.0         16.5
238330 Flooring Contractors...  Factor..........          0.9         22.4          0.3          5.0        0.718         12.3         10.5         16.5
                                Size Std........          8.5          8.0          7.5          6.0         14.0         16.5
238340 Tile and Terrazzo        Factor..........          0.7         10.4          0.3          3.4        0.695  ...........          7.5         16.5
 Contractors.                   Size Std........          7.5          7.5          7.5          6.0          9.5
238350 Finish Carpentry         Factor..........          0.7         15.1          0.2          2.2        0.686  ...........          7.5         16.5
 Contractors.                   Size Std........          7.5          8.0          7.0          6.0          8.0
238390 Other Building           Factor..........          1.4         18.1          0.5          5.1        0.705        -13.9         11.0         16.5
 Finishing Contractors.         Size Std........         10.5          8.0          8.5          6.0         11.5         20.0
238910 Site Preparation         Factor..........          2.0         39.3          0.9          2.1        0.733         19.4         12.0         16.5
 Contractors.                   Size Std........         12.5          8.5         11.0          6.0         16.5         16.5
238990 All Other Specialty      Factor..........          1.4        113.9          0.5          7.8        0.703        -24.4         11.5         16.5
 Trade Contractors.             Size Std........         10.0         11.0          9.0          8.0         11.0         20.0
--------------------------------------------------------------------------------------------------------------------------------------------------------

Methodology for Agricultural Size Standards

    Forty-six industries in Subsectors 111 and 112 currently have the 
same $1 million receipts-based size standard. These industries 
previously had a $750,000 receipts-based size standard, which was 
established directly by Congress in section 806 of the Small Business 
Reauthorization Act of 2000, Appendix I, Public Law 106-554, 114 Stat. 
2763, December 21, 2000). Effective August 19, 2019, that size standard 
was raised to $1 million by the interim final rule adjusting all 
monetary size standards for inflation (published in the Federal 
Register on July 18, 2019, (84 FR 34261)). NDAA 2017 directed SBA to 
establish the size standards for those industries in the same manner 
that the Agency establishes the size standards for other industries and 
to include them in the 5-year rolling review under the Jobs Act. 
Accordingly, in this proposed rule, SBA has evaluated those industries 
using the same industry and Federal contracting factors that it uses in 
evaluating characteristics of all other industries and their size 
standards. However, the industry data from the 2012 Agricultural Census 
tabulation reveals that firms in agricultural industries are much 
smaller than those in all other industries with receipts-based size 
standards. Therefore, as stated earlier, based on the data, SBA has 
established $1 million and $5 million as the minimum and maximum 
receipts-based size standard levels, respectively, for agricultural 
industries, as opposed to $6 million as the minimum and $41.5 million 
as the maximum receipts-based size standard levels for all other 
industries. Similarly, SBA rounds a calculated receipts-based size 
standard for agricultural industries to the nearest $250,000 instead of 
rounding it to the nearest $500,000 as for other industries.

[[Page 62249]]

    Of the 46 NAICS 6-digit industries in Subsectors 111 and 112, the 
special tabulation of the 2012 Census of Agriculture provided data for 
36 industries at the NAICS 6-digit level. Of the remaining ten (10), 
seven (7) were aggregated at three different 5-digit NAICS levels and 
three (3) were aggregated at one 4-digit NAICS level. SBA ranked these 
40 industry categories (i.e., thirty-six (36) 6-digit, three (3) 3-
digit, and one (1) 4-digit) in terms of each industry factor and 
obtained the 20th percentile an 80th percentile values for each factor. 
However, since all those industries currently have the same $1 million 
size standard, SBA cannot compute the 20th percentile and 80th 
percentile values from existing size standards as for other industries. 
Given the $1 million minimum and $5 million maximum size standard 
levels and calculated size standards being rounded to the nearest 
$250,000, SBA derived all possible size standards levels (e.g., $1 
million, $1.25 million, $1.5 million . . . $4.75 million, and $5 
million). Based on these levels, SBA computed $1.75 million as the 20th 
percentile and $4.25 million as 80th percentile values of size 
standards for agricultural industries. Combining these results with the 
20th percentile and 80th percentile values of industry factors, SBA 
computed a size standard for each factor for each industry. These 
results are provided in Table 4, above.
    For the 10 industries for which the data did not exist at the 6-
digit NAICS level, SBA estimated the size standard at the 5- or 4-digit 
NAICS level at which the data were available and applied the same 
results to the relevant 6-digit NAICS levels. These results are shown, 
below, in Table 5, Calculated Agricultural Size Standards at the 4- or 
5-Digit NAICS Level Matched to the 6-Digit Level.

  Table 5--Calculated Agricultural Size Standards at the 4- or 5-Digit NAICS Level Matched to the 6-Digit Level
----------------------------------------------------------------------------------------------------------------
                                                  Calculated
                                                 size standard                                      Calculated
        4- or 5-digit NAICS code/title            ($ million)       6-digit NAICS code/title       size standard
                                                 (see Table 4)                                      ($ million)
----------------------------------------------------------------------------------------------------------------
11119 Other Grain Farming.....................            $2.0  111191 Oilseed and Grain                    $2.0
                                                                 Combination Farming.
                                                                111199 All Other Grain Farming..             2.0
11141 Food Crops Grown Under Cover............             4.0  111411 Mushroom Production......             4.0
                                                                111419 Other Food Crops Grown                4.0
                                                                 Under Cover.
11199 All Other Crop Farming..................            2.25  111991 Sugar Beet Farming.......            2.25
                                                                111992 Peanut Farming...........            2.25
                                                                111998 All Other Miscellaneous              2.25
                                                                 Crop Farming.
1125 Aquaculture..............................            3.25  112511 Finfish Farming and Fish             3.25
                                                                 Hatcheries.
                                                                112512 Shellfish Farming........            3.25
                                                                112519 Other Aquaculture........            3.25
----------------------------------------------------------------------------------------------------------------

Evaluation of Size Standards for Subindustry Categories or 
``Exceptions''

    In accordance with SBA's approach to evaluating size standards for 
subindustry categories (or ``exceptions''), SBA has evaluated the three 
(3) exceptions covered by this rule using the procedures described in 
the revised SBA's Methodology. The results of that analysis are 
discussed in the following two subsections.

Forest Fire Suppression and Fuel Management Services

    Forest Fire Suppression and Fuels Management Services are 
subindustry categories or exceptions under NAICS 115310 (Support 
Activities for Forestry) with the current size standard of $20.5 
million in average annual receipts. In 2003, SBA established a 
different size standard for these subindustry activities (68 FR 33348 
(June 4, 2003)). In 2013, as part of the first 5-year review of size 
standards under the Jobs Act, SBA initially maintained $17.5 million as 
the size standard for these exceptions (78 FR 37398 (June 20, 2013)), 
and subsequently, as part of the adjustment to monetary-based size 
standards for inflation, the Agency increased the size standard from 
$17.5 million to $19 million (79 FR 33647 (June 12, 2014)), and in the 
fiscal year 2019 the size standard was adjusted from $19 million to 
$20.5 million (84 FR 34261 (July 18, 2019)).
    The data from the Census Bureau's and NASS' special tabulations are 
limited to the 6-digit NAICS industry level, and hence, do not provide 
separate data to evaluate a size standard at the subindustry level. As 
such, SBA relied upon data from other sources to evaluate the current 
$20.5 million size standard for both exceptions.
    Firms engaged in the Forest Fire Suppression and Fuels Management 
Services subindustries were identified from the contracting data 
reported in FPDS-NG during fiscal years 2016-2018. Specifically, the 
contracts under Forest Fire Suppression and Fuels Management Services 
exceptions can be identified as those classified within NAICS 115310 
under the Product Service Code (PSC) F003 (Natural Resources/
Conservation--Forest-Range Fire Suppression/Presuppression). SBA also 
evaluated the contract data from the USDA Forest Service National 
Interagency Fire Center (https://www.fs.fed.us/managing-land/fire and 
http://www.fs.fed.us/business/incident/vipr.php). SBA also evaluated 
the description of requirements of the contracts for Forest Fire 
Suppression and Fuels Management Services in FPDS-NG to identify 
principal activities related to forest fire suppression and fuel 
management services and to differentiate them from other support 
activities for forestry. SBA identified activities associated with 
specialized crews, equipment and engines with trained personnel that 
are critical to perform the tasks of suppressing or managing fires as 
principal activities and other activities, such as leases of equipment, 
machinery and transportation vehicles, or provision of services that do 
not require specialized personnel or training as supporting activities. 
Since most firms involved in Fire Suppression Services were also found 
to be involved in Fuels Management Services and vice versa, SBA 
analyzed the two as one subindustry category.
    Finally, SBA obtained receipts and employment data for the fiscal 
years 2016-2018 from FPDS-NG and from the System for Award Management 
(SAM) to develop industry and Federal contracting factors for 
evaluating the size standard for the two exceptions. SBA chose firms 
with receipts greater than zero and less than $1 billion. Firms with 
receipts greater than $1 billion are

[[Page 62250]]

outliers and their revenues would skew the data. Similarly, firms with 
receipts at or below zero have insignificant contributions to total 
Federal contract dollars obligated to the industry. Table 4, above, 
shows the results from the analysis of these subindustries, which 
supported a $23.5 million size standard as compared to the current 
$20.5 million. Given the inherent uncertainty of occurrences of forest 
fires and recent surges in forest fire incidents and extended fire 
seasons, SBA believes that contracting officers need to have 
flexibility to be able to hire enough small businesses, especially in 
the worst-case scenario. SBA estimates that in a very busy season, it 
is not implausible to assume 120 days of 14 hours shifts. Assuming an 
average price of $43 dollars per person per hour, a total amount of 
about $6 million could be awarded to a firm with an average number of 4 
crews. In the case of firms with 15 crews, the amount could reach $22.0 
million. Both numbers include only payments to firefighters for direct 
fire suppression activities; in other words, here we did not consider 
in the analysis additional payments, such as payments for fire engines, 
water tenders, etc. With this reality in mind, SBA proposes to increase 
the size standard for the Forest Fire Suppression and Fuels Management 
Services exceptions to $25 million, above the current size standard of 
$20.5 million and the calculated size standard of $23.5 million and 
seeks comments on this proposal.

Dredging and Surface Cleanup Activities

    The Dredging and Surface Cleanup Activities (Dredging) size 
standard is an exception established by SBA within the 6-digit NAICS 
code 237990 (Other Heavy and Civil Engineering Construction). As stated 
previously, the data from the Census Bureau's special tabulation of the 
Economic Census is limited to the 6-digit NAICS industry level, and 
hence, does not provide separate data at the subindustry level to 
evaluate exceptions. Accordingly, SBA relied upon the data from other 
sources to evaluate the current $30.0 million size standard for 
Dredging.
    SBA identified firms engaged in the Dredging subindustry using the 
contract awards data within NAICS 237990 in FPDS-NG for fiscal years 
2016-2018. Specifically, dredging contracts were identified as those 
classified under one of the following Product Service Codes (PSCs): 
C1KF--Architect and Engineering Construction--Dredging Facilities; 
M1KF--Operation of Dredging Facilities; X1KF--Lease/Rental of Dredging 
Facilities; Y1KF--Construction of Dredging Facilities; Z1KF--
Maintenance of Dredging Facilities; Z2KF--Repair or alternation of 
Dredging Facilities; and 1955--Dredges. SBA obtained receipts and 
employment data for the identified Dredging firms from the System for 
Award Management (SAM) and FPDS-NG to develop industry and Federal 
contracting factors for Dredging. SBA excluded from the analysis firms 
for which Dredging Federal contracts dollars accounted for a very small 
percentage of their average annual receipts. SBA also excluded from the 
analysis contracts awarded under PSCs C1KF and X1KF and firms receiving 
such contracts as contract dollars under those PSCs were very small. 
After these exclusions, SBA evaluated the data for a total of 100 
Dredging firms that have received Federal contracts under NAICS 237990 
and the above PSCs during fiscal years 2016-2018.
    SBA also looked at the Dredging contracting information from the US 
Army Corps of Engineers' Navigation and Civil Works Decision Support 
Center (NDC) (https://www.iwr.usace.army.mil/About/Technical-Centers/NDC-Navigation-and-Civil-Works-Decision-Support/), as well as the 
annual reports from Dredging Contractors of America (DCA) 
(www.dredgingcontractors.org). However, those sources do not provide 
information on business size and seem to include a smaller number of 
dredging firms as compared to the number of Dredging firms found in 
FPDS-NG. SBA's analysis included a vast majority of all firms found in 
the NDC and DCA reports, except a few that received contracts in 
industries other than NAICS 237990 or in PSCs other than those 
described above.
    Table 4, above, shows the results from the analysis of the Dredging 
subindustry that support raising the current $30.0 million size 
standard for the Dredging exception to $33.0 million. As also shown in 
Table 4, the results for overall NAICS 237990 yields a smaller 
calculated size standard of $29.5 million as compared to the current 
standard of $39.5 million. Thus, the analytical results from the latest 
available industry and Federal contracting data seem to suggest that a 
separate size standard is still warranted for Dredging. Historically, 
the Dredging exception size standard has been lower than the overall 
NAICS 237990 size standard, but the latest results suggest otherwise. 
As such, in this proposed rule, SBA is proposing to retain current size 
standard for the overall NAICS 237990 and increase the size standard of 
the Dredging subindustry to $33.0 million and seeking comment on the 
proposal. Additionally, SBA is seeking comments on whether Dredging and 
Surface Cleanup Activities should continue to be treated as an 
exception or on whether it should be eliminated and subject to the same 
overall NAICS 237990 size standard.

Summary of Calculated Size Standards

    Of the one hundred (100) industries and three (3) subindustries 
(exceptions) reviewed in this proposed rule, the results from analyses 
of the latest available data on the five primary factors from Table 4, 
Size Standards Supported by Each Factor for Each Industry (millions of 
dollars), above, would support increasing size standards for sixty-five 
(65) industries and three (3) subindustries, and decreasing size 
standards for thirty-five (35) industries. Table 6, Summary of 
Calculated Size Standards, summarizes these results by NAICS sector.

                                  Table 6--Summary of Calculated Size Standards
----------------------------------------------------------------------------------------------------------------
                                                                  Number  of  Number  of  Number  of  Number  of
                                                                     size        size        size        size
             NAICS sector                      Sector name         standards   standards   standards   standards
                                                                   reviewed    increased   decreased   unchanged
----------------------------------------------------------------------------------------------------------------
11....................................  Agriculture, Forestry,            64          60           4           0
                                         Fishing and Hunting.
21....................................  Mining, Quarrying, and             4           3           1           0
                                         Oil and Gas Extraction.
22....................................  Utilities...............           3           3           0           0
23....................................  Construction............          32           2          30           0
                                                                 -----------------------------------------------
    All Sectors.......................  ........................         103          68          35           0
----------------------------------------------------------------------------------------------------------------


[[Page 62251]]

Evaluation of SBA Loan Data

    Before proposing or deciding on an industry's size standard 
revision, SBA also considers the impact of size standards revisions on 
SBA's loan programs. Accordingly, SBA examined its internal 7(a) and 
504 loan data for fiscal years 2016-2018 to assess whether the 
calculated size standards in Table 4 (above) need further adjustments 
to ensure credit opportunities for small businesses through those 
programs. For the industries reviewed in this rule, the data shows that 
it is mostly businesses much smaller than the current or proposed size 
standards that receive SBA's 7(a) and 504 loans. For example, for 
industries covered by this rule, more than 95.6 percent of 7(a) and 504 
loans in fiscal years 2016-2018 went to businesses below the current or 
proposed size standards.

Proposed Changes to Size Standards

    Based on the analytical results in Table 4 and considerations of 
impacts of calculated size standards in terms of access by currently 
small businesses to SBA's loans, as discussed above, of a total of one 
hundred three (103) industries or subindustries (exceptions) with 
receipts-based size standards in Sectors 11, 21, 22 and 23 that are 
covered by this rule, and considering the current situation due to the 
COVID-19 related national emergency and its impacts on small businesses 
and the overall economy, SBA proposes to increase size standards for 68 
industries or subindustries, and retain the current size standards for 
the remaining 35 industries.

Special Considerations

    On March 13, 2020, the ongoing Coronavirus Disease 2019 (COVID-19) 
was declared a pandemic of enough severity and magnitude to warrant an 
emergency declaration for all states, territories, and the District of 
Columbia. With the COVID-19 emergency, many small businesses nationwide 
are experiencing economic hardship as a direct result of the Federal, 
State, and local public health measures that are being taken to 
minimize the public's exposure to the virus. These measures, some of 
which are government-mandated, are being implemented nationwide and 
include the closures of restaurants, bars, and gyms. In addition, based 
on the advice of public health officials, other measures, such as 
keeping a safe distance from others or even stay-at-home orders, are 
being implemented, resulting in a dramatic decrease in economic 
activity as the public avoids malls, retail stores, and other 
businesses.
    The Coronavirus Aid, Relief, and Economic Security Act (the CARES 
Act or the Act) (Pub. L. 116-136) was signed on March 27, 2020, to 
provide emergency assistance and health care response for individuals, 
families, and businesses affected by the coronavirus pandemic. Section 
1102 of the Act temporarily permits SBA to guarantee 100 percent of 
7(a) loans under a new program titled the Paycheck Protection Program 
(PPP). Section 1106 of the Act provides for forgiveness of up to the 
full principal amount of qualifying loans guaranteed under the PPP. The 
PPP and loan forgiveness are intended to provide economic relief to 
small businesses nationwide adversely impacted under the COVID-19. On 
April 24, 2020, additional funding for the CARES Act, including for the 
PPP, was provided.
    The Agency is following closely the development of the pandemic and 
the economic situation and recovery. The consequence of the initial 
response of the public to the COVID-19 pandemic as well as the 
different measures taken by the Government to contain it (e.g. stay at 
home orders, social distancing, etc.) have resulted in the present 
economic decline. A variety of economic indicators such as the Gross 
Domestic Product (GDP) and the unemployment rate shows that this 
recession is significantly worse than any other recession since World 
War II. The GDP decreased nearly 5 percent, and the Personal 
consumption in goods and services decreased 6.8 percent in the first 
quarter of 2020; in May 2020, personal income decreased 4.2 percent and 
the unemployment rate increased from 3.5 percent in February 2020 to 
11.1 percent in June 2020, and, also for the month of June 2020, Non-
farm payroll decreased by 15 million since February 2020. Specifically 
for the sectors evaluated in this proposed rule, more recent data in 
June 2020 shows that the unemployment rate for Agriculture and related 
private wage and salary workers was 5.4 percent, but the sector of 
Mining, quarrying, and oil and gas extraction shows an unemployment 
rate of 17.8 percent and the construction sector, 10.1 percent. In June 
2019, the unemployment rates for these sectors were 5.9, 3.2 and 4 
percent, respectively. The latest Federal Reserve Board's Monetary 
Policy Report shows that in general the most impacted firms in these 
sectors are small businesses.\1\
---------------------------------------------------------------------------

    \1\ Board of Governors of the Federal Reserve System (June 
2020), Monetary Policy Report, p. 24 (see https://www.federalreserve.gov/monetarypolicy/files/20200612_mprfullreport.pdf) and U.S. Census Bureau's Small Business 
Pulse Survey (https://portal.census.gov/pulse/data). The latest is a 
recent survey created by the Census Bureau to provide high-
frequency, detailed information on participation in small business-
specific initiatives such as the PPP.
---------------------------------------------------------------------------

    Accordingly, in view of above impacts on small businesses from the 
COVID-19 pandemic and Federal government efforts to provide relief to 
small businesses and support to the overall economy, SBA proposes to 
adopt increases to size standards for 68 industries and retain the 
current size standards for 35 industries for which analytical results 
suggested their size standards could be lowered.
    The proposed size standards are presented in Table 7, Proposed Size 
Standards Revisions. Also presented in Table 7 are current and 
calculated size standards for comparison.

                                   Table 7--Proposed Size Standards Revisions
----------------------------------------------------------------------------------------------------------------
                                                                   Current size     Calculated     Proposed size
            NAICS code                  NAICS industry title        standard ($    size standard    standard ($
                                                                     million)       ($ million)      million)
----------------------------------------------------------------------------------------------------------------
111110...........................  Soybean Farming..............            $1.0            $2.0            $2.0
111120...........................  Oilseed (except Soybean)                  1.0             2.0             2.0
                                    Farming.
111130...........................  Dry Pea and Bean Farming.....             1.0             2.5             2.5
111140...........................  Wheat Farming................             1.0             2.0             2.0
111150...........................  Corn Farming.................             1.0            2.25            2.25
111160...........................  Rice Farming.................             1.0            2.25            2.25
111191...........................  Oilseed and Grain Combination             1.0             2.0             2.0
                                    Farming.
111199...........................  All Other Grain Farming......             1.0             2.0             2.0

[[Page 62252]]

 
111211...........................  Potato Farming...............             1.0            3.75            3.75
111219...........................  Other Vegetable (except                   1.0            3.25            3.25
                                    Potato) and Melon Farming.
111310...........................  Orange Groves................             1.0             3.5             3.5
111320...........................  Citrus (except Orange) Groves             1.0            3.75            3.75
111331...........................  Apple Orchards...............             1.0             4.0             4.0
111332...........................  Grape Vineyards..............             1.0             3.5             3.5
111333...........................  Strawberry Farming...........             1.0            4.75            4.75
111334...........................  Berry (except Strawberry)                 1.0            3.25            3.25
                                    Farming.
111335...........................  Tree Nut Farming.............             1.0            3.25            3.25
111336...........................  Fruit and Tree Nut                        1.0             4.5             4.5
                                    Combination Farming.
111339...........................  Other Noncitrus Fruit Farming             1.0             3.0             3.0
111411...........................  Mushroom Production..........             1.0             4.0             4.0
111419...........................  Other Food Crops Grown Under              1.0             4.0             4.0
                                    Cover.
111421...........................  Nursery and Tree Production..             1.0            2.75            2.75
111422...........................  Floriculture Production......             1.0            3.25            3.25
111910...........................  Tobacco Farming..............             1.0            2.25            2.25
111920...........................  Cotton Farming...............             1.0            2.75            2.75
111930...........................  Sugarcane Farming............             1.0             4.5             4.5
111940...........................  Hay Farming..................             1.0            2.25            2.25
111991...........................  Sugar Beet Farming...........             1.0            2.25            2.25
111992...........................  Peanut Farming...............             1.0            2.25            2.25
111998...........................  All Other Miscellaneous Crop              1.0            2.25            2.25
                                    Farming.
112111...........................  Beef Cattle Ranching and                  1.0            2.25            2.25
                                    Farming.
112112...........................  Cattle Feedlots..............             8.0            19.5            19.5
112120...........................  Dairy Cattle and Milk                     1.0            3.25            3.25
                                    Production.
112210...........................  Hog and Pig Farming..........             1.0             3.5             3.5
112310...........................  Chicken Egg Production.......            16.5            15.5            16.5
112320...........................  Broilers and Other Meat Type              1.0             3.0             3.0
                                    Chicken Production.
112330...........................  Turkey Production............             1.0            3.25            3.25
112340...........................  Poultry Hatcheries...........             1.0             3.5             3.5
112390...........................  Other Poultry Production.....             1.0            3.25            3.25
112410...........................  Sheep Farming................             1.0             3.0             3.0
112420...........................  Goat Farming.................             1.0            2.25            2.25
112511...........................  Finfish Farming and Fish                  1.0            3.25            3.25
                                    Hatcheries.
112512...........................  Shellfish Farming............             1.0            3.25            3.25
112519...........................  Other Aquaculture............             1.0            3.25            3.25
112910...........................  Apiculture...................             1.0            2.75            2.75
112920...........................  Horses and Other Equine                   1.0             2.5             2.5
                                    Production.
112930...........................  Fur-Bearing Animal and Rabbit             1.0            3.25            3.25
                                    Production.
112990...........................  All Other Animal Production..             1.0             2.5             2.5
113110...........................  Timber Tract Operations......            12.0            16.5            16.5
113210...........................  Forest Nurseries and                     12.0            18.0            18.0
                                    Gathering of Forest Products.
114111...........................  Finfish Fishing..............            22.0            20.5            22.0
114112...........................  Shellfish Fishing............             6.0            12.5            12.5
114119...........................  Other Marine Fishing.........             8.0            10.0            10.0
114210...........................  Hunting and Trapping.........             6.0             7.5             7.5
115111...........................  Cotton Ginning...............            12.0            14.0            14.0
115112...........................  Soil Preparation, Planting,               8.0             8.5             8.5
                                    and Cultivating.
115113...........................  Crop Harvesting, Primarily by             8.0            12.0            12.0
                                    Machine.
115114...........................  Postharvest Crop Activities              30.0            27.5            30.0
                                    (except Cotton Ginning).
115115...........................  Farm Labor Contractors and              16.50            12.5            16.5
                                    Crew Leaders.
115116...........................  Farm Management Services.....             8.0            13.5            13.5
115210...........................  Support Activities for Animal             8.0             9.5             9.5
                                    Production.
115310...........................  Support Activities for                    8.0            10.0            10.0
                                    Forestry.
Except...........................  Fire Suppression Services....            20.5            23.5            25.0
Except...........................  Fuels Management Services....            20.5            23.5            25.0
213112...........................  Support Activities for Oil               41.5            38.0            41.5
                                    and Gas Operations.
213113...........................  Support Activities for Coal              22.0            24.0            24.0
                                    Mining.
213114...........................  Support Activities for Metal             22.0            36.0            36.0
                                    Mining.
213115...........................  Support Activities for                    8.0            18.0            18.0
                                    Nonmetallic Minerals (except
                                    Fuels) Mining.
221310...........................  Water Supply and Irrigation              30.0            36.0            36.0
                                    Systems.
221320...........................  Sewage Treatment Facilities..            22.0            31.0            31.0
221330...........................  Steam and Air-Conditioning               16.5            26.5            26.5
                                    Supply.
236115...........................  New Single-Family Housing                39.5             8.0            39.5
                                    Construction (except For-
                                    Sale Builders).
236116...........................  New Multifamily Housing                  39.5            25.5            39.5
                                    Construction (except For-
                                    Sale Builders).
236117...........................  New Housing For-Sale Builders            39.5            27.5            39.5
236118...........................  Residential Remodelers.......            39.5            13.5            39.5
236210...........................  Industrial Building                      39.5            29.0            39.5
                                    Construction.
236220...........................  Commercial and Institutional             39.5            25.5            39.5
                                    Building Construction.

[[Page 62253]]

 
237110...........................  Water and Sewer Line and                 39.5            20.0            39.5
                                    Related Structures
                                    Construction.
237120...........................  Oil and Gas Pipeline and                 39.5            33.0            39.5
                                    Related Structures
                                    Construction.
237130...........................  Power and Communication Line             39.5            31.0            39.5
                                    and Related Structures
                                    Construction.
237210...........................  Land Subdivision.............            30.0            22.0            30.0
237310...........................  Highway, Street, and Bridge              39.5            28.5            39.5
                                    Construction.
237990...........................  Other Heavy and Civil                    39.5            29.5            39.5
                                    Engineering Construction.
Except...........................  Dredging and Surface Clean-Up            30.0            32.5            32.5
                                    Activities.
238110...........................  Poured Concrete Foundation               16.5            12.5            16.5
                                    and Structure Contractors.
238120...........................  Structural Steel and Precast             16.5            13.0            16.5
                                    Concrete Contractors.
238130...........................  Framing Contractors..........            16.5             8.5            16.5
238140...........................  Masonry Contractors..........            16.5            10.5            16.5
238150...........................  Glass and Glazing Contractors            16.5             8.0            16.5
238160...........................  Roofing Contractors..........            16.5            10.0            16.5
238170...........................  Siding Contractors...........            16.5             7.0            16.5
238190...........................  Other Foundation, Structure,             16.5            13.0            16.5
                                    and Building Exterior
                                    Contractors.
238210...........................  Electrical Contractors and               16.5            13.5            16.5
                                    Other Wiring Installation
                                    Contractors.
238220...........................  Plumbing, Heating, and Air-              16.5            12.0            16.5
                                    Conditioning Contractors.
238290...........................  Other Building Equipment                 16.5            19.5            19.5
                                    Contractors.
238310...........................  Drywall and Insulation                   16.5            11.5            16.5
                                    Contractors.
238320...........................  Painting and Wall Covering               16.5            10.0            16.5
                                    Contractors.
238330...........................  Flooring Contractors.........            16.5            10.5            16.5
238340...........................  Tile and Terrazzo Contractors            16.5             7.5            16.5
238350...........................  Finish Carpentry Contractors.            16.5             7.5            16.5
238390...........................  Other Building Finishing                 16.5            11.0            16.5
                                    Contractors.
238910...........................  Site Preparation Contractors.            16.5            12.0            16.5
238990...........................  All Other Specialty Trade                16.5            11.5            16.5
                                    Contractors.
----------------------------------------------------------------------------------------------------------------

    Table 8, Summary of Proposed Size Standards Revisions by Sector, 
below, summarizes the proposed changes to size standards by NAICS 
sector.

                         Table 8--Summary of Proposed Size Standards Revisions by Sector
----------------------------------------------------------------------------------------------------------------
                                                                  Size standards  Size standards  Size standards
             NAICS Sector                      Sector name           increased        lowered       maintained
----------------------------------------------------------------------------------------------------------------
11....................................  Agriculture, Forestry,                60               0               4
                                         Fishing and Hunting.
21....................................  Mining, Quarrying, and                 3               0               1
                                         Oil and Gas Extraction.
22....................................  Utilities...............               3               0               0
23....................................  Construction............               2               0              30
                                                                 -----------------------------------------------
    All Sectors.......................  ........................              68               0              35
----------------------------------------------------------------------------------------------------------------

Evaluation of Dominance in Field of Operation

    SBA has determined that for the industries which it has evaluated 
in this proposed rule, no individual firm at or below the proposed size 
standard would be large enough to dominate its field of operation. At 
the proposed size standards levels, if adopted, the small business 
share of total industry receipts among those industries would be, on 
average, 1.1 percent, varying from 0.003 percent to 30.5 percent. These 
market shares effectively preclude a firm at or below the proposed size 
standards from exerting control on any of the industries.

Alternatives Considered

    By law, SBA is required to develop numerical size standards for 
establishing eligibility for Federal small business assistance programs 
and to review every five years all size standards and make necessary 
adjustments to reflect the current industry structure and Federal 
market conditions. Other than varying the levels of size standards by 
industry and changing the measures of size standards (e.g., using 
annual receipts vs. the number of employees), no practical alternatives 
exist to the systems of numerical size standards.
    The proposal is to increase size standards where the data suggested 
increases are warranted, and to retain, in response to COVID-19 
emergency and resultant economic impacts on small businesses, all 
current size standards where the data suggested lowering is 
appropriate.
    Nonetheless, SBA considered two other alternatives. Alternative 
option one was to propose changes exactly as suggested by the 
analytical results. Alternative option two was to retain all current 
size standards.
    Alternative option one would cause a substantial number of 
currently small businesses to lose their small business status and 
hence to lose their access to Federal small business assistance, 
especially small business set-aside contracts and SBA's financial 
assistance in some cases. During the first 5-year review of size 
standards, some commenters had expressed concerns

[[Page 62254]]

about SBA's policy of not lowering size standards based on the 
analytical results.
    As part of option one, SBA also considered increasing 68 size 
standards as suggested by the analytical results and mitigating the 
impact of the decreases to size standards by adjusting the calculated 
sizes considering the impact on small business access to Federal 
contracting and loans. However, in the present situation with the 
global COVID-19 pandemic resulting in high levels of risk and dramatic 
reductions in economic activity of unprecedented nature, SBA presents 
the impacts of adopting the analytical results without adjustment in 
alternative option one and proposes to retain all size standards for 
which the evaluation of principal factors suggested reductions, and to 
adopt only the increases suggested by the evaluation. SBA will adopt 
this approach temporarily and may reevaluate this approach as the 
economic situation evolves.
    Under option two, given the current COVID-19 Pandemic, SBA 
considered retaining the current level of all size standards even 
though the current analysis may suggest changing them. SBA considers 
that the option of retaining all size standards at this moment provides 
the opportunity to reassess the economic situation once the economic 
recovery starts. Under this option, as the current situation develops, 
SBA will be able to assess new data available on economic indicators, 
federal procurement, and SBA loans as well, before adopting changes to 
size standards. However, SBA is not adopting option two because the 
Regulatory Impact Analysis shows that retaining all size standards at 
their current levels is more onerous for the small businesses than the 
option of adopting 68 increases and retaining 35 size standards. 
Additionally, SBA regards size standards evaluation of 46 agricultural 
industries for the first time as one of the most important 
contributions of our current comprehensive size standards review, and 
postponing the adoption of the calculated size standards should be 
detrimental for the small businesses within those industries. Finally, 
given the inherent uncertainty of occurrences of fires, the recent 
surges in forest fire incidents and the extended fire seasons, SBA 
believes that not proposing the increases in size standards for the 
NAICS 115310 in general and its two exceptions will adversely affect 
the availability of small businesses for these tasks, especially in the 
worst-case scenarios. SBA may reevaluate this approach as the current 
economic situation evolves.

Request for Comments

    SBA invites public comments on this proposed rule, especially on 
the following issues:
    1. SBA seeks feedback on whether SBA's proposal to increase 68 size 
standards and retain 35 size standards is appropriate given the results 
from the latest available industry and Federal contracting data of each 
industry and subindustry (exception) reviewed in this proposed rule, 
along with ongoing uncertainty and dramatic contraction in economic 
activity due to the global COVID-19 pandemic. SBA also seeks 
suggestions, along with supporting facts and analysis, for alternative 
standards, if they would be more appropriate than the proposed size 
standards.
    2. SBA also seeks comments on whether SBA should not lower any size 
standards in view of COVID-19 pandemic and its adverse impacts on small 
businesses as well as on the overall economic situation when analytical 
results suggest some size standards could be lowered. SBA believes that 
lowering size standards under the current economic environment would 
run counter to what Congress and the Federal government are doing to 
aid and provide relief to the nation's small businesses impacted by the 
COVID-19 pandemic.
    3. Given the uncertainty produced by the global COVID-19 pandemic 
and the economic consequences, SBA would like to receive comments from 
the public on the possibility of lowering size standards while 
mitigating the consequences of the lower standards, instead of not 
lowering any size standards.
    4. In accordance with NDAA 2017, in this proposed rule, SBA has 
evaluated 46 agricultural industries for which the size standards were 
previously established directly by Congress and proposed a new size 
standard for each of those industries. SBA seeks comments on the 
methodology and data sources it used to develop such proposed standards 
as well as on the appropriateness of the proposed size standards 
levels.
    5. In calculating the overall industry size standard, SBA has 
assigned equal weight to each of the five primary factors in all 
industries and subindustries covered by this proposed rule. SBA seeks 
feedback on whether it should assign equal weight to each factor or on 
whether it should give more weight to one or more factors for certain 
industries or subindustries. Recommendations to weigh some factors 
differently than others should include suggested weights for each 
factor along with supporting facts and analysis.
    6. For evaluating the size standards for the Forest Fire 
Suppression and Fuel Management Services subindustries (``exceptions'') 
within NAICS 115310, SBA used PSC F003 (Forest/Range Fire Suppression/
Presuppression Services) within NAICS 115310 in FPDS-NG to identify 
firms engaged in the Forest Fire Suppression and Fuel Management 
Services exceptions during fiscal years 2016-2018. Using the receipts 
and employment data for those firms, SBA analyzed the industry and 
Federal contracting factors for these subindustries. SBA seeks 
suggestions or comments on data sources it used and its proposal to 
increase the current $20.5 million size standard for both exceptions to 
$25 million even if the analysis supported an increase to $23.5 
million. SBA is also interested in comments on the possible elimination 
of the Forest Fire Suppression and Fuel Management Services as 
``exceptions'' to NAICS 115310, and the application of the same general 
size standard for NAICS 115310. Comments on applying the same NAICS 
115310 size standard for Forest Fire Suppression and Fuel management 
Services should address why the same size standard is more suitable 
than separate size standards for Forest Fire Suppression and Fuel 
Management Services or why firms engaged in Forest Fire Suppression and 
Fuel Management Services should continue to be treated as separate 
activities from the rest of NAICS 115310 for SBA's size standards 
purposes.
    7. For evaluating the size standard for the Dredging and Surface 
Cleanup Activities (Dredging), a subindustry (``exception'') category 
within NAICS code 237990, SBA used relevant PSCs within NAICS code 
237990 to identify Dredging contracts in FPDS-NG and firms receiving 
such contracts during fiscal years 2016-2018. Using the receipts and 
employment data for those firms from FPDS-NG, SBA analyzed the industry 
and Federal contracting factor for this subindustry. SBA seeks 
suggestions or comments on the use of the data sources and the proposed 
size standard. SBA is also interested in comments on the elimination of 
the subindustry category for Dredging, and the application of the same 
size standard as for overall NAICS 237990. Comments on applying the 
same NAICS 237990 size standard for Dredging should address the basis 
for why that industry size standard is more suitable than a specific 
dredging subindustry size standard or why dredging firms

[[Page 62255]]

should continue to be evaluated as a discrete subindustry for SBA's 
size standards purposes.
    8. In addition to comments on its proposal to increase the size 
standard for the Dredging exception from the current $30.0 million to 
$33.0 million, SBA also seeks comments regarding the requirement for a 
dredging concern to qualify as small on a Federal procurement that it 
or its similarly situated subcontractors must perform at least 40 
percent of the volume dredged with its own equipment or equipment owned 
by another small dredging concern (see Footnote 2 in 13 CFR 121.201). 
This requirement has been in SBA's small business size regulations 
since 1974 (see 30 FR 24669, July 5, 1974 and 39 FR 31302, August 28, 
1974) and was interpreted by SBA's Office of Hearings and Appeals to 
encompass subcontractors in Size Appeal of U.S. Army Corps of 
Engineers, SBA No. SIZ-5915 (2018). This proposed rule retains the 
requirement set forth in Footnote 2 in order to ensure that small 
Dredging firms or their similarly situated subcontractors perform a 
significant and meaningful portion of a Dredging project set aside for 
small business. However, SBA requests comments as to whether that 
footnote is still necessary. Comments pertaining to this requirement 
should address: (1) Whether there continues to be a need to retain the 
current 40 percent equipment requirement under current industry 
practices; (2) whether the 40 percent equipment requirement should be 
revised, and if so, the rationale for an alternative percentage; and 
(3) whether a different and more verifiable requirement based on an 
alternative measure (such as value of contract or personnel involved) 
may achieve the same objective of ensuring that small businesses 
perform significant and meaningful work on dredging contracts set aside 
for small businesses.
    9. Finally, SBA seeks comments on data sources it used to examine 
industry and Federal market conditions, as well as suggestions on 
relevant alternative data sources that the Agency should evaluate in 
reviewing or modifying size standards for industries covered by this 
proposed rule.
    Public comments on the above issues are very valuable to SBA for 
validating its proposed size standards revisions in this proposed rule. 
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 the application of 
size standards for Federal procurement programs, SBA suggests that 
commenters provide information on the size of contracts in their 
industries, 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 and 13771, the Regulatory 
Flexibility Act (5 U.S.C. 601-612), Executive Orders 13563, 12988, and 
13132, and the Paperwork Reduction Act (44 U.S.C. Ch. 35)

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, in the next section SBA provides a 
Regulatory Impact Analysis of this proposed rule, including: (1) A 
statement of the need for the proposed action, (2) an examination of 
alternative approaches, and (3) an evaluation of the benefits and 
costs--both quantitative and qualitative--of the proposed action and 
the alternatives considered. However, this rule is not a ``major rule'' 
under the Congressional Review Act, 5 U.S.C. 800.

Regulatory Impact Analysis

    1. What is a need for this regulatory action?
    Under the Small Business Act (Act) (15 U.S.C. 632(a)), SBA's 
Administrator is responsible for establishing small business size 
definitions (or ``size standards'') and ensuring that such definitions 
vary from industry to industry to reflect differences among various 
industries. The Jobs Act requires SBA to review every five years all 
size standards and make necessary adjustments to reflect current 
industry and Federal market conditions. This proposed rule is part of 
the second 5-year review of size standards in accordance with the Jobs 
Act. The first 5-year review of size standards was completed in early 
2016. Such periodic reviews of size standards provide SBA with an 
opportunity to incorporate ongoing changes to industry structure and 
Federal market environment into size standards and to evaluate the 
impacts of prior revisions to size standards on small businesses. This 
also provides SBA with an opportunity to seek and incorporate public 
input to the size standards review and analysis. SBA believes that 
proposed size standards revisions for industries being reviewed in this 
rule will make size standards more reflective of the current economic 
characteristics of businesses in those industries and the latest trends 
in Federal marketplace.
    SBA's mission is to aid and assist small businesses through a 
variety of financial, procurement, business development and counseling, 
and disaster assistance programs. To determine the actual intended 
beneficiaries of these programs, SBA establishes numerical size 
standards by industry to identify businesses that are deemed small.
    The proposed revisions to the existing size standards for 103 
industries in NAICS Sectors 11, 21, 22 and 23 are consistent with SBA's 
statutory mandates to help small businesses grow and create jobs and to 
review and adjust size standards every five years. This regulatory 
action promotes the Administration's goals and objectives as well as 
meets the SBA's statutory responsibility. One of SBA's goals in support 
of promoting the Administration's objectives is to help small 
businesses succeed through fair and equitable access to capital and 
credit, Federal Government contracts and purchases, and management and 
technical assistance. Reviewing and modifying size standards, when 
appropriate, ensures that intended beneficiaries are able to access 
Federal small business programs that are designed to assist them to 
become competitive and create jobs.
    2. What are the potential benefits and costs of this regulatory 
action?
    OMB directs agencies to establish an appropriate baseline to 
evaluate any benefits, costs, or transfer impacts of regulatory actions 
and alternative approaches considered. The baseline should represent 
the agency's best assessment of what the world would look like absent 
the regulatory action. For a new regulatory action promulgating 
modifications to an existing regulation (such as modifying the existing 
size standards), a baseline assuming no change to the regulation (i.e., 
making no changes to current size standards) generally provides an 
appropriate benchmark for evaluating benefits, costs, or transfer 
impacts of proposed regulatory changes and their alternatives.

Proposed Changes to Size Standards

    Based on the results from analysis of latest industry and Federal 
contracting data, as well as consideration of impact of size standards 
changes on small businesses and significant adverse impacts of the 
COVID-19 emergency on small businesses and the overall

[[Page 62256]]

economic activity, of the total of 103 industries in Sectors 11, 21, 22 
and 23 that have receipts-based size standards, SBA proposes to 
increase size standards for 68 industries (including exceptions), and 
maintain current size standards for the remaining 35 industries.

The Baseline

    For purposes of this regulatory action, the baseline represents 
maintaining the ``status quo,'' i.e., making no changes to the current 
size standards. Using the number of small businesses and levels of 
benefits (such as set-aside contracts, SBA's loans, disaster 
assistance, etc.) they receive under the current size standards as a 
baseline, one can examine the potential benefits, costs and transfer 
impacts of proposed changes to size standards on small businesses and 
on the overall economy.
    Based on the 2012 Economic Census (the latest available), of a 
total of about 2.7 million businesses in industries in Sectors 11, 21, 
22, and 23 for which SBA proposes to increase their receipts-based size 
standards, 96.9 percent are considered small under the current size 
standards. That percentage varies from 95.5 percent in Sector 21 to 
98.5 percent in Sector 23. Based on the data from FPDS-NG for fiscal 
years 2016-2018, about 17,300 unique firms in those industries received 
at least one Federal contract during that period, of which 86.4 percent 
were small under the current size standards. A total of $30.2 billion 
in average annual contract dollars were awarded to businesses in those 
industries during the period of evaluation, and 51.2 percent of the 
dollars awarded went to small businesses. For these sectors, providing 
contract dollars to small business through set asides is quite 
important. From the total small business contract dollars awarded 
during the period considered, 83.4 percent were awarded through various 
small business set-aside programs and 16.6 percent were awarded through 
non-set aside contracts. Based on the SBA's internal data on its loan 
programs for fiscal years 2016-2018, small businesses in those 
industries received, on an annual basis, a total of nearly 8,300 7(a) 
and 504 loans in that period, totaling about $2.4 billion, of which 89 
percent was issued through the 7(a) program and 11 percent was issued 
through the 504/CDC program. During fiscal years 2016-2018, small 
businesses in those industries also received 318 loans through the 
SBA's Economic Injury Disaster Loan (EIDL) program, totaling about 
$25.0 million on an annual basis. Table 9, Baseline for All Industries, 
below, provides these baseline results by sector.

                                      Table 9--Baseline for All Industries
----------------------------------------------------------------------------------------------------------------
                                     Sector 11       Sector 21       Sector 22       Sector 23         Total
----------------------------------------------------------------------------------------------------------------
Baseline All Industries (current              64               4               3              32             103
 size standards)................
    Total firms (Economic              2,122,631           8,196           3,673         587,173       2,721,673
     Census)....................
    Total small firms under            2,046,316           7,828           3,586         578,430       2,636,160
     current size standards
     (Economic Census)..........
    Small firms as % of total               96.4            95.5            97.6            98.5            96.9
     firms......................
    Total contract dollars ($             $591.2           $90.0          $311.1         $29,178       $30,170.0
     million) (FPDS-NG FY2016-
     2018)......................
    Total small business                  $459.1           $31.3           $67.0         $14,879       $15,436.4
     contract dollars under
     current standards ($
     million) (FPDS-NG FY2016-
     2018)......................
    Small business dollars as %             77.6            34.8            21.5            51.0            51.2
     of total dollars (FPDS-NG
     FY2016-2018)...............
    Total No. of unique firms              3,557             298             624          13,290          17,300
     getting contracts (FPDS-NG
     FY2016-2018)...............
    Total No. of unique small              3,174             221             488          11,422          14,933
     firms getting small
     business contracts (FPDS-NG
     FY2016-2018)...............
    Small business firms as % of            89.2            74.2            78.2            85.9            86.4
     total firms................
    No. of 7(a) and 504/CDC                  843              73              36           7,334           8,286
     loans (FY2016-2018)........
    Amount of 7(a) and 504 loans          $620.7           $34.2            $6.5        $1,705.3        $2,366.7
     ($ million) (FY2016-2018)..
    No. of EIDL loans (FY2016-                90               3               3             222             318
     2018)......................
    Amount of EIDL loans ($                 $5.6            $0.6            $0.7           $18.0           $25.0
     million) (FY2016-2018).....
----------------------------------------------------------------------------------------------------------------

Increases to Size Standards

    As stated above, of 103 receipts-based size standards in Sectors 
11, 21, 22 and 23 that are reviewed in this rule, based on the results 
from analyses of latest industry and Federal market data as well as 
impacts of size standards changes on small businesses, SBA proposes to 
increase 68 size standards. Below are descriptions of the benefits, 
costs and transfer impacts of these proposed increases to size 
standards.

Benefits of Increases to Size Standards

    The most significant benefit to businesses from proposed increases 
to size standards is gaining eligibility for Federal small business 
assistance programs or retaining that eligibility for a longer period. 
These include SBA's business loan programs, EIDL program, and Federal 
procurement programs intended for small businesses. Federal procurement 
programs provide targeted, set-aside opportunities for small businesses 
under SBA's various business development and contracting programs. 
These include the 8(a)/BD(business development) Program, the Small 
Disadvantaged Businesses (SDB) Program, the Historically Underutilized 
Business Zones (HUBZone) Program, the Women-Owned Small Businesses 
(WOSB) Program, the Economically Disadvantaged Women-Owned Small 
Businesses (EDWOSB) Program, and the Service-Disabled Veteran-Owned 
Small Businesses (SDVOSB) Program.
    Besides set-aside contracting and financial assistance discussed 
above, small businesses also benefit through reduced fees, less 
paperwork, and fewer compliance requirements that are available to 
small businesses through Federal government. However, SBA has no data 
to estimate the number of small businesses receiving such benefits.
    Based on the 2012 Economic Census (latest available), SBA estimates 
that in 68 industries in NAICS Sectors 11, 21, 22 and 23 for which it 
has proposed to increase size standards, more than 49,400 firms (see 
Table 10, below) not small under the current size standards will become 
small under the proposed

[[Page 62257]]

size standards increases and therefore become eligible for these 
programs. That represents about 2.4 percent of all firms classified as 
small under the current size standards in industries for which SBA has 
proposed increasing size standards. If adopted, proposed size standards 
would result in an increase to the small business share of total 
receipts in those industries from 35.6 percent to 55.2 percent.
    With more businesses qualifying as small under the proposed 
increases to size standards, Federal agencies will have a larger pool 
of small businesses from which to draw for their small business 
procurement programs. Growing small businesses that are close to 
exceeding the current size standards will be able to retain their small 
business status for a longer period under the higher size standards, 
thereby enabling them to continue to benefit from the small business 
programs.
    Based on the FPDS-NG data for fiscal years 2016-2018, SBA estimates 
that about 90 firms that are active in Federal contracting in those 
industries would gain small business status under the proposed size 
standards. Based on the same data, SBA estimates that those newly 
qualified small businesses under the proposed increases to size 
standards, if adopted, could receive Federal small business contracts 
totaling about $9.8 million annually. That represents a 1.6 percent 
increase to small business dollars from the sector baseline.
    The added competition from more businesses qualifying as small can 
result in lower prices to the government for procurements set aside or 
reserved for small businesses, but SBA cannot quantify this impact. 
Costs could be higher when full and open contracts are awarded to 
HUBZone businesses that receive price evaluation preferences. However, 
with agencies likely setting aside more contracts for small businesses 
in response to the availability of a larger pool of small businesses 
under the proposed increases to size standards, HUBZone firms might 
actually end up getting more set-aside contracts and fewer full and 
open contracts, thereby resulting in some cost savings to agencies. 
While SBA cannot estimate such costs savings as it is impossible to 
determine the number and value of unrestricted contracts to be 
otherwise awarded to HUBZone firms will be awarded as set-asides, such 
cost savings are likely to be relatively small as only a small fraction 
of full and open contracts are awarded to HUBZone businesses.
    Under SBA's 7(a) and 504 loan programs, based on the data for 
fiscal years 2016-2018, SBA estimates up to about 21 7(a) and 504 loans 
totaling about $14.4 million could be made to these newly qualified 
small businesses in those industries under the proposed size standards. 
That represents a 0.6 percent increase to the loan amount compared to 
the Group baseline.
    Newly qualified small businesses will also benefit from the SBA's 
EIDL program. Since the benefit provided through this program is 
contingent on the occurrence and severity of a disaster in the future, 
SBA cannot make a meaningful estimate of this impact. However, based on 
the historical trends of the EIDL data, SBA estimates that, on an 
annual basis, the newly defined small businesses under the proposed 
increases to size standards, if adopted, could receive four (4) EIDL 
loans, totaling about $0.5 million. Additionally, the newly defined 
small businesses would also benefit through reduced fees, less 
paperwork, and fewer compliance requirements that are available to 
small businesses through the Federal government, but SBA has no data to 
quantify this impact. Table 10, Impacts of Proposed Increases to Size 
Standards, provides these results by NAICS sector.

                            Table 10--Impacts of Proposed Increases to Size Standards
----------------------------------------------------------------------------------------------------------------
                                     Sector 11       Sector 21       Sector 22       Sector 23         Total
----------------------------------------------------------------------------------------------------------------
No. of industries with proposed               60               3               3               2              68
 increases to size standards....
Total current small businesses         2,016,066             536           3,586           5,413       2,025,601
 in industries with Proposed
 increases to size standards
 (Economic Census 2012).........
Additional firms qualifying as            49,352              21               9              34          49,415
 small under proposed standards
 (2012 Economic Census).........
Percentage of additional firms              2.4%            3.9%            0.2%            0.6%            2.4%
 qualifying as small relative to
 current small businesses in
 industries with proposed
 increases to size standards....
No. of current unique small                3,143             171             488             576           4,346
 firms getting small business
 contracts in industries with
 proposed increases to size
 standards (FPDS-NG FY2016-2018)
 \1\............................
Additional small business firms               66               1              12              12              88
 getting small business status
 (FPDS-NG FY2016-2018)..........
% increase to small businesses              2.1%            0.6%            2.5%            2.1%            2.0%
 relative to current unique
 small firms getting small
 business contracts in
 industries with proposed
 increases to size standards
 (FPDS-NG FY2016-2018) \1\......
Total small business contract             $455.7            $4.5           $67.0           $90.8          $618.0
 dollars under current standards
 in industries with proposed
 increases to size standards ($
 million) (FPDS-NG FY2016-2018).
Estimated small business dollars            $5.1            $0.2            $2.7            $1.8            $9.8
 available to newly qualified
 small firms (Using avg dollars
 obligated to SBs) ($ million)
 (FPDS-NG FY 2016-2018) \1\.....
% increase to small business                 1.1             5.1             4.1             2.0            1.26
 dollars relative to total small
 business contract dollars under
 current standards in industries
 with proposed increases to size
 standards......................
Total no. of 7(a) and 504 loans              779               4              36              96             915
 to small business in industries
 with proposed increases to size
 standards (FY2016-2018)........
Total amount of 7(a) and 504              $582.5            $1.5            $6.5           $33.7          $624.3
 loans to small businesses in
 industries with proposed
 increases to size standards ($
 million) (FY2016-2018).........

[[Page 62258]]

 
Estimated no. of 7(a) and 504                 18               1               1               1              21
 loans to newly qualified small
 firms..........................
Estimated 7(a) and 504 loan                $13.5            $0.4            $0.2            $0.4           $14.4
 amount to newly qualified small
 firms ($ million)..............
% increase to 7(a) and 504 loan              2.3            25.0             2.8             1.0             2.3
 amount relative to the total
 amount of 7(a) and 504 loans in
 industries with proposed
 increases to size standards....
Total no. of EIDL loans to small              73               0               3               3              79
 businesses in industries with
 proposed increases to size
 standards (FY2016-2018)........
Total amount of EIDL loans to               $4.7            $0.0            $0.7            $0.3            $5.8
 small businesses in industries
 with proposed increases to size
 standards ($ million) (FY2016-
 2018)..........................
Estimated no. of EIDL loans to                 2               0               1               1               4
 newly qualified small firms....
Estimated EIDL loan amount to              $0.13            $0.0            $0.3           $0.10            $0.5
 newly qualified small firms ($
 million).......................
% increase to EIDL loan amount               2.3             0.0            33.3            33.3             8.2
 relative to the total amount of
 EIDL loans in industries with
 proposed increases to size
 standards......................
----------------------------------------------------------------------------------------------------------------
1. Additional dollars are calculated multiplying average small business dollars obligated per DUNS times change
  in number of firms. Numbers of firms are calculated using the SBA current size standard, not the contracting
  officer's size designation.
2. Total impact represents total unique number of firms impacted to avoid double counting as some firms are
  participating in more than one industry.

Costs of Increases to Size Standards

    Besides having to register in SAM to be able to participate in 
Federal contracting and update the SAM profile annually, small 
businesses incur no direct costs to gain or retain their small business 
status as a result of increases to size standards. All businesses 
willing to do business with the Federal government must register in SAM 
and update their SAM profiles annually, regardless of their size 
status. SBA believes that a vast majority of businesses that are 
willing to participate in Federal contracting are already registered in 
SAM and update their SAM profiles annually. More importantly, this 
proposed rule does not establish the new size standards for the very 
first time; rather it intends to modify the existing size standards in 
accordance with a statutory requirement and the latest data and other 
relevant factors.
    To the extent that the newly qualified small businesses could 
become active in Federal procurement, the proposed increases to size 
standards, if adopted, may entail some additional administrative costs 
to the government as a result of more businesses qualifying as small 
for Federal small business programs. For example, there will be more 
firms seeking SBA's loans, more firms eligible for enrollment in the 
Dynamic Small Business Search (DSBS) database or in certify.sba.gov, 
more firms seeking certification as 8(a)/BD or HUBZone firms or 
qualifying for small business, SDB, WOSB, EDWOSB, and SDVOSB status, 
and more firms applying for SBA's 8(a)/BD and all small business 
mentor-prot[eacute]g[eacute] programs. With an expanded pool of small 
businesses, it is likely that Federal agencies would set aside more 
contracts for small businesses under the proposed increases to size 
standards. One may surmise that this might result in a higher number of 
small business size protests and additional processing costs to 
agencies. However, the SBA's historical data on size protests shows 
that the number of size protests decreased following the increases to 
receipts-based size standards as part of the first 5-year review of 
size standards. Specifically, on an annual basis, the number of size 
protests fell from about 600 during fiscal years 2011-2013 (review of 
most receipts-based size standards was completed by the end of FY 
2013), as compared to about 500 during fiscal years 2014-2016 when size 
standards increases were in effect. That represents a 17 percent 
decline. Among those newly defined small businesses seeking SBA's 
loans, there could be some additional costs associated with 
verification of their small business status. However, small business 
lenders have an option of using the tangible net worth and net income 
based alternative size standard instead of using the industry-based 
size standards to establish eligibility for SBA's loans. For these 
reasons, SBA believes that these added administrative costs will be 
minor because necessary mechanisms are already in place to handle these 
added requirements.
    Additionally, some Federal contracts may possibly have higher 
costs. With a greater number of businesses defined as small due to the 
proposed increases to size standards, Federal agencies may choose to 
set aside more contracts for competition among small businesses only 
instead of using a full and open competition. The movement of contracts 
from unrestricted competition to small business set-aside contracts 
might result in competition among fewer total bidders, although there 
will be more small businesses eligible to submit offers under the 
proposed size standards. However, the additional costs associated with 
fewer bidders are expected to be minor since, by law, procurements may 
be set aside for small businesses under the 8(a)/BD, SDB, HUBZone, 
WOSB, EDWOSB, or SDVOSB programs only if awards are expected to be made 
at fair and reasonable prices.
    Costs may also be higher when full and open contracts are awarded 
to HUBZone businesses that receive price evaluation preferences. 
However, with agencies likely setting aside more contracts for small 
businesses in response to the availability of a larger pool of small 
businesses under the proposed increases to size standards, HUBZone 
firms might actually end up getting fewer full and open contracts, 
thereby resulting in some cost savings to agencies. However, such cost 
savings are likely to be minimal as only a small fraction of 
unrestricted contracts are awarded to HUBZone businesses.

[[Page 62259]]

Transfer Impacts of Increases to Size Standards

    The proposed increases to size standards, if adopted, may result in 
some redistribution of Federal contracts between the newly qualified 
small businesses and large businesses and between the newly qualified 
small businesses and small businesses under the current standards. 
However, it would have no impact on the overall economic activity since 
total Federal contract dollars available for businesses to compete for 
will not change with changes to size standards. While SBA cannot 
quantify with certainty the actual outcome of the gains and losses from 
the redistribution contracts among different groups of businesses, it 
can identify several probable impacts in qualitative terms. With the 
availability of a larger pool of small businesses under the proposed 
increases to size standards, some unrestricted Federal contracts which 
would otherwise be awarded to large businesses may be set aside for 
small businesses. As a result, large businesses may lose some Federal 
contracting opportunities. Similarly, some small businesses under the 
current size standards may obtain a fewer set aside contracts due to 
the increased competition from more advanced businesses qualifying as 
small under the proposed increases to size standards. This impact may 
be offset by a greater number of procurements being set aside for all 
small businesses. With larger businesses qualifying as small under the 
higher size standards, smaller small businesses could face some 
disadvantage in competing for set aside contracts against their larger 
counterparts. However, SBA cannot quantify these impacts.
    3. What alternatives have been considered?
    Under OMB Circular A-4, SBA is required to consider regulatory 
alternatives to the proposed changes in the proposed rule. In this 
section, SBA describes and analyzes two such alternatives to the 
proposed rule. Alternative Option One to the proposed rule, a more 
stringent alternative to the proposed rule, would propose adopting size 
standards based solely on the analytical results. In other words, the 
size standards of 68 industries for which the analytical results 
suggest raising size standards would be raised. However, the size 
standards of 35 industries for which the analytical results suggest 
lowering size standards would be lowered. Alternative Option Two would 
propose retaining all size standards for all industries, given the 
uncertainty generated by the ongoing COVID-19 pandemic. Below, SBA 
discusses and presents the net impacts of each option.

Alternative Option One: Consider Adopting All Calculated Size Standards

    As discussed elsewhere in this proposed rule, Alternative Option 
One would cause a substantial number of currently small businesses to 
lose their small business status and hence to lose their access to 
Federal small business assistance, especially small business set-aside 
contracts and SBA's financial assistance in some cases. These 
consequences could be mitigated. For example, in response to the 2008 
Financial Crisis and economic conditions that followed, SBA adopted a 
general policy in the first 5-year comprehensive size standards review 
to not lower any size standard (except to exclude one or more dominant 
firms) even when the analytical results suggested the size standard 
should be lowered. Currently, because of the economic challenges 
presented by the COVID-19 pandemic and the measures taken to protect 
public health, SBA has decided to propose the same general policy of 
not lowering size standards in the ongoing second 5-year comprehensive 
size standards review as well.
    The primary benefit of adopting this alternative is that SBA's 
procurement, management, technical and financial assistance resources 
would be targeted to the most appropriate beneficiaries of such 
programs according to the analytical results. Adopting the size 
standards suggested by the analytical results would also promote 
consistency with analytical results in SBA's exercise of its authority 
to determine size standards. SBA seeks public comment on the impact of 
adopting the size standard as suggested by the analytical results.
    As explained in the Size Standards Methodology White Paper, in 
addition to adopting all results of the primary analysis, SBA evaluates 
other relevant factors as needed such as the impact of the reductions 
or increases of size standards on the distribution of contracts awarded 
to small businesses, and may adopt different results with the intention 
of mitigating potential negative impacts.
    We have discussed already the benefits and costs of increasing 68 
size standards. Below we discuss the benefits and costs of decreasing 
35 size standards.

Benefits of Decreases to Size Standards

    The most significant benefit to businesses from decreases to size 
standards when the SBA's analysis suggests such decreases is to ensure 
that size standards are more reflective of latest industry structure 
and Federal market trends and that Federal small business assistance is 
more effectively targeted to its intended beneficiaries. These include 
SBA's loan programs, EIDL program, and Federal procurement programs 
intended for small businesses. Federal procurement programs provide 
targeted, set-aside opportunities for small businesses under SBA's 
business development programs, such as small business, 8(a)/BD, SDB 
HUBZone, WOSB, EDWOSB, and SDVOSB programs. The adoption of smaller 
size standards when the results support them diminishes the risk of 
awarding contracts to firms which are not small anymore.
    Decreasing size standards may reduce the administrative costs of 
the government, because the risk of awarding contracts to other than 
small businesses may diminish when the size standards reflect better 
the structure of the market. The risks of providing SBA's loans to 
firms that are not needing them the most, or allowing firms that are 
not eligible for small business set-asides or to participate on the SBA 
procurement programs will provide for a better chance for smaller firms 
to grow and benefit from the opportunities available on the Federal 
market, and strengthen the small business industrial base for the 
Federal Government.

Costs of Decreases to Size Standards

    With fewer businesses qualifying as small under the decreases to 
size standards, Federal agencies will have a smaller pool of small 
businesses from which to draw for their small business procurement 
programs. For example, in Option One, during fiscal years 2016-2018, 
agencies awarded, on an annual basis, about $14,818 million in small 
business contracts in those 35 industries for which this Option 
considered decreasing size standards. Table 11 below shows that 
lowering 35 size standards would reduce Federal contract dollars 
awarded to small businesses by $865.4 million or about 5.8 percent 
relative to the baseline level, of which 99 percent are accounted for 
by the Construction Sector (NAICS 23). Because of the importance of the 
construction sector for Federal procurement and the immediate impact on 
businesses that will see their status as small changed relatively fast, 
SBA would adopt mitigating measures to reduce the negative impact under 
the assumptions of Option One. SBA could adopt one or more of the 
following three actions: (1) To accept decreases in size standards as 
suggested by the analytical

[[Page 62260]]

results, (2) to decrease size standards by a smaller amount than the 
calculated threshold, and (3) to retain the size standards at their 
current levels.
    Nevertheless, since Federal agencies are still required to meet the 
statutory small business contracting goal of 23 percent, actual impacts 
on the overall set aside activity is likely to be smaller as agencies 
are likely to award more set aside contracts to small businesses that 
continue to remain small under the reduced size standards.
    With fewer businesses qualifying as small, the decreased 
competition can also result in higher prices to the Government for 
procurements set aside or reserved for small businesses, but SBA cannot 
quantify this impact. However, SBA estimates an almost null impact or 
non-significant reduction in dollars obligated to small businesses, if 
mitigation measures are adopted. Decreases to size standards would have 
a very minor impact on small businesses applying for SBA's 7(a) and 504 
loans because a vast majority of such loans are issued to businesses 
that are far below the reduced size standards. For example, based on 
the loan data for fiscal years 2016-2018, Option One estimates that 
about 71 7(a) and 504 loans with total amounts of $16.8 million could 
not be made to those small businesses that would lose eligibility under 
the reduced size standards (before mitigation). That represents about 
one (1.0) percent decrease of the loan amounts compared to the 
baseline. Table 11, Impacts of Decreases to Size Standards Under 
Alternative Option One, below, shows these results by sector. However, 
the actual impact could be much less as businesses losing small 
business eligibility under the decreases to industry based size 
standards could still qualify for SBA's loans under the tangible net 
worth and net income based alternative size standard.
    Businesses losing small business status would also be impacted in 
terms of access to loans through SBA's EIDL program. However, SBA 
expects such impact to be minimal as only a small number of businesses 
in those industries received such loans during fiscal years 2016-2018. 
Additionally, all those businesses were below the reduced size 
standards. Since this program is contingent on the occurrence and 
severity of a disaster in the future, SBA cannot make a meaningful 
estimate of this impact.
    Small businesses becoming other than small if size standards were 
decreased might lose benefits through reduced fees, less paperwork, and 
fewer compliance requirements that are available to small businesses 
through Federal government, but SBA has no data to quantify this 
impact. However, if agencies determine that SBA's size standards do not 
adequately serve such purposes, they can establish a different size 
standard with an approval from SBA if they are required to use SBA's 
size standards for their programs.

                  Table 11--Impacts of Decreases to Size Standards Under Alternative Option One
----------------------------------------------------------------------------------------------------------------
                                     Sector 11       Sector 21       Sector 22       Sector 23         Total
----------------------------------------------------------------------------------------------------------------
No. of industries for which SBA                4               1               0              30              35
 considered decreasing size
 standards (2012 Economic
 Census)........................
Total current small businesses            30,250           7,292               0         573,017         610,559
 in industries for which SBA
 considered decreasing size
 standards (EC 2012)............
Estimated no. of firms losing                 17              16               0           5,479           5,512
 small status for which SBA
 considered decreasing size
 standards (EC 2012)............
% of Firms losing small status               0.1             0.2             0.0             1.0             0.9
 relative to current small
 businesses in industries for
 which SBA considered decreasing
 size standards.................
No. of current unique small                   33              50               0          11,087          11,157
 firms getting small business
 contracts in industries for
 which SBA considered decreasing
 size standards (FPDS-NG FY2016-
 2018) \1\......................
Estimated number of small                      0               2               0             518             518
 business firms that would have
 lost small business status in
 the decreases that SBA
 considered.....................
% decrease to small business                   0             4.0               0             4.7             4.6
 firms relative to current
 unique small firms getting
 small business contracts in
 industries for which SBA
 considered decreasing size
 standards (FPDS-NG FY2016-
 2018)\ 1\......................
Total small business contract               $3.3           $26.9              $0         $14,790         $14,818
 dollars under current size
 standards in industries for
 which SBA considered decreasing
 size standards ($ million)
 (FPDS-NG FY2016-2018)..........
Estimated small business dollars              $0            $1.1              $0          $864.4          $865.4
 not available to firms losing
 small business status (Using
 avg dollars obligated to SBs)
 ($ million)\ 1\ (FPDS-NG FY
 2016-2018).....................
% decrease to small business                   0             4.1               0             5.8             5.8
 dollars relative to total small
 business contract dollars under
 current size standards in
 industries for which SBA
 considered decreasing size
 standards......................
Total no. of 7(a) and 504 loans               64              69               0           7,328           7,371
 to small businesses in
 industries for which SBA
 considered decreasing size
 standards (FY2016-2018)........
Total amount of 7(a) and 504               $38.2           $32.7            $0.0        $1,671.5        $1,742.4
 loans to small businesses in
 industries for which SBA
 considered decreasing size
 standards ($ million) (FY2016-
 2018)..........................
Estimated no. of 7(a) and 504                  1               0               0              70              71
 loans not available to firms
 that would have lost small
 business status................
Estimated 7(a) and 504 loan                 $0.6            $0.0            $0.0           $16.2           $16.8
 amount not available to firms
 that would have lost small
 status ($ million).............

[[Page 62261]]

 
% decrease to 7(a) and 504 loan             1.6%            0.0%            0.0%            1.0%            1.0%
 amount relative to the total
 amount of 7(a) and 504 loans in
 industries for which SBA
 considered decreasing size
 standards......................
Total no. of EIDL loans to small              17               3               0             219             239
 businesses in industries for
 which SBA considered decreasing
 size standards (FY2016-2018)...
Total amount of EIDL loans to               $0.9            $0.6            $0.0           $17.8           $19.2
 small businesses in industries
 for which SBA considered
 decreasing size standards ($
 million) (FY2016-2018).........
Estimated no. of EIDL loans not               -1               0               0              -3              -4
 available to firms that would
 have lost small business status
Estimated EIDL loan amount not             -$0.1            $0.0            $0.0           -$0.2              $0
 available to firms that would
 have lost small business status
 ($ million)....................
% decrease to EIDL loan amount              5.9%            0.0%            0.0%            1.4%            1.5%
 relative to the baseline.......
----------------------------------------------------------------------------------------------------------------
1. Additional dollars are calculated multiplying average small business dollars obligated per DUNS times change
  in number of firms.
2. Total impact represents total unique industries impacted to avoid double counting as some industries have
  large firms gaining small business status and small firms extending small business status.

Transfer Impacts of Decreases to Size Standards

    If the size standards were decreased under Alternative Option One, 
it may result in a redistribution of Federal contracts between small 
businesses losing their small business status and large businesses and 
between small businesses losing their small business status and small 
businesses remaining small under the reduced size standards. However, 
as under the proposed increases to size standards, it would have no 
impact on the overall economic activity since total Federal contract 
dollars available for businesses to compete for will stay the same. 
While SBA cannot estimate with certainty the actual outcome of the 
gains and losses among different groups of businesses from contract 
redistribution resulting from decreases to size standards, it can 
identify several probable impacts. With a smaller pool of small 
businesses under the decreases to size standards, some set-aside 
Federal contracts to be otherwise awarded to small businesses may be 
competed in unrestricted basis. As a result, large businesses may have 
more Federal contracting opportunities. However, because agencies are 
still required by law to award 23 percent of dollars to small 
businesses, SBA expects the movement of set-aside contracts to 
unrestricted competition to be limited. For the same reason, small 
businesses remaining small under the reduced size standards are likely 
to obtain more set aside contracts due to the reduced competition from 
fewer businesses qualifying as small under the decreases to size 
standards. With some larger small businesses losing small business 
status under the decreases to size standards, smaller small businesses 
would likely become more competitive in obtaining set aside contracts. 
However, SBA cannot quantify these impacts.

Net Impact of Alternative Option One

    To estimate the net impacts of Alternative Option One, SBA followed 
the same methodology used to evaluate the impacts of the proposed size 
standards (see Table 10 above). However, under Alternative Option One, 
SBA used the calculated size standards instead of the proposed ones to 
determine the impacts of changes to current thresholds. The impact of 
the increases of the calculated size standards were already shown in 
Table 10 above. Table 11 (above) and Table 12, Net Impacts of Size 
Standards Changes under Alternative Option One, below, present the 
impact of the decreases of size standards and the net impact of 
adopting the calculated results under Alternative Option One, 
respectively.
    Based on the 2012 Economic Census, SBA estimates that in 103 
industries in NAICS Sectors 11, 21, 22 and 23 for which the analytical 
results suggested to change size standards, about 43,900 firms (see 
Table 12, below), would become small under the Option One. That 
represents about 1.7 percent of all firms classified as small under the 
current size standards.
    Based on the FPDS-NG data for fiscal years 2016-2018, SBA estimates 
that about 433 active firms in Federal contracting in those industries 
would lose small business status under Option One, most of them from 
the Construction Sector. This represents a decrease of about 2.9 
percent of the total number of small businesses participating in 
Federal contracting under the current size standards. Based on the same 
data, SBA estimates that about $855.6 million of Federal procurement 
dollars would not be available to firms losing their small status. This 
represents a decrease of 5.5 percent from the Group's baseline. Again, 
a large amount of the loses are accounted for by the Construction 
Sector.
    Based on the SBA's loan data for fiscal years 2016-2018, the total 
number of 7(a) and 504 loans may decrease by about 50 loans, and the 
loan amounts by about $2.4 million. This represents a 0.1 percent 
decrease of the loan amounts relative to the Group baseline.
    Firms' Participation under the SBA's EIDL program will be affected 
as well. Since the benefit provided through this program is contingent 
on the occurrence and severity of a disaster in the future, SBA cannot 
make a meaningful estimate of this impact. However, based on the 
historical trends of the EIDL data, SBA estimates that, on an annual 
basis, the net impact of the Option One on additional firms is zero, 
and additional loans amounts total about $0.18 million for the Group 
relative to the baseline. Table 12, below, provides these results by 
NAICS sector.

                  Table 12--Net Impacts of Size Standards Changes Under Alternative Option One
----------------------------------------------------------------------------------------------------------------
                                     Sector 11       Sector 21       Sector 22       Sector 23         Total
----------------------------------------------------------------------------------------------------------------
No. of industries with proposed               64               4               3              32             103
 changes to size standards......

[[Page 62262]]

 
Total no. of small business            2,046,316           7,828           3,586         578,430       2,636,160
 under the current size
 standards (2012 Economic
 Census)........................
Additional firms qualifying as            49,335               5               9          -5,445          43,902
 small under proposed size
 standards (2012 Economic
 Census)........................
% of additional firms qualifying            2.4%            0.1%            0.2%           -0.9%            1.7%
 as small relative to total
 current small businesses.......
No. of current unique small                3,174             221             488          11,422          14,933
 firms getting small business
 contracts (FPDS-NG FY2016-2018)
 \1\............................
Additional small firms getting                64              -1              12            -505            -433
 small business status (FPDS-NG
 FY2016-2018)...................
% increase to small firms                    2.0            -0.5             2.5            -4.4            -2.9
 relative to current unique
 small firms getting small
 business contracts (FPDS-NG
 FY2016-2018) \1\...............
Total small business contract              459.1            31.3            67.0        14,879.0        15,436.4
 dollars under current size
 standards ($ million) (FPDS-NG
 FY 2016-2018)..................
Estimated small business dollars             5.1            -0.9             2.7          -862.6          -855.6
 available to newly qualified
 small firms ($ million) (FPDS-
 NG FY 2016-2018) \1\...........
% increase to dollars relative               1.1            -2.8             4.1            -5.8            -5.5
 to total small business
 contract dollars under current
 size standards.................
Total no. of 7(a) and 504 loans              843              73              36           7,334           8,286
 to small businesses (FY2016-
 2018)..........................
Total amount of 7(a) and 504              $620.7           $34.2            $6.5        $1,705.3        $2,366.7
 loans to small businesses
 (FY2016-2018)..................
Estimated no. of additional 7(a)              17               1               1             -69             -50
 and 504 loans to newly
 qualified small firms..........
Estimated additional 7(a) and              $12.9            $0.4            $0.2          -$15.8           -$2.4
 504 loan amount to newly
 qualified small firms ($
 million).......................
% increase to 7(a)and 504 loan              2.1%            1.1%            2.8%          -0.93%           -0.1%
 amount relative to the total
 amount of 7(a) and 504 loans to
 small businesses...............
Total no. of EIDL loans to small              90               3               3             222             318
 businesses (FY2016-2018).......
Total amount of EIDL loans to               $5.6            $0.6            $0.7           $18.0           $25.0
 small businesses (FY2016-2018).
Estimated no. of additional EIDL               1               0               1              -2               0
 loans to newly qualified small
 firms..........................
Estimated additional EIDL loan             $0.08            $0.0            $0.2           -$0.1           $0.18
 amount to newly qualified small
 firms ($ million)..............
% increase to EIDL loan amount              1.4%            0.0%           33.3%           -0.8%            0.7%
 relative to the total amount of
 EIDL loans to small businesses.
----------------------------------------------------------------------------------------------------------------
\1\ Additional dollars are calculated multiplying average small business dollars obligated per DUNS times change
  in number of firms.
\2\ Total impact represents total unique industries impacted to avoid double counting as some industries have
  large firms gaining small business status and small firms extending small business status.

Alternative Option Two: To Retain All Current Size Standards

    Under this option, given the current COVID-19 pandemic, as 
discussed elsewhere, SBA considered retaining the current levels of all 
size standards even though the analytical results may suggest changing 
them. SBA considers that the option of retaining all size standards at 
this moment provides the opportunity to reassess the economic situation 
once the economic recovery starts. Under this option, as the current 
situation develops, SBA will be able to assess new data available on 
economic indicators, federal procurement, and SBA loans as well. SBA 
estimates a net impact of zero for this option, when compared to the 
baseline. However, if we compare the proposal of increasing 68 size 
standards and retaining 35 with this alternative approach, the benefits 
for small businesses of adopting the proposal will not be attained, 
because of which SBA is not proposing the Alternative Option Two.

Executive Order 13771

    SBA has determined, subject to the approval of the Office of 
Information and Regulatory Affairs (OIRA) of the Office of Management 
and Budget (OMB), that this proposed rule is not subject to the 
requirements of E.O. 13771, because most of the rule's impacts are 
income transfers between small and other than small businesses. 
According to the E.O. 13771 guidance in OMB M-17-21, dated April 5, 
2017 (``E.O. 13771 Guidance''), ``transfers'' are not covered by E.O. 
13771. The E.O. 13771 Guidance also states that ``in some cases, 
[transfer rules] may impose requirements apart from transfers, or 
transfers may distort markets causing inefficiencies. In those cases, 
the actions would need to be offset to the extent they impose more than 
de minimis costs.'' SBA estimates that this rulemaking would impose 
only de minimis costs on small businesses and would result in 
negligible compliance costs. Thus, SBA has determined that this 
rulemaking is exempt from the requirements of E.O. 13771. Details on 
the estimated costs of this proposed rule can be found in the 
Regulatory Impact Analysis above.

Initial Regulatory Flexibility Analysis

    According to the Regulatory Flexibility Act (RFA), 5 U.S.C. 601-
612, when an agency issues a rulemaking, it must prepare a regulatory 
flexibility analysis to address the impact of the rule on small 
entities.
    This proposed rule, if adopted, may have a significant impact on a 
substantial number of small businesses in the industries covered by 
this proposed rule. As described above, this rule may affect small 
businesses seeking

[[Page 62263]]

Federal contracts, loans under SBA's 7(a), 504 and EIDL 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 is the need for and objective of the rule;? (2) 
What are SBA's description and estimate of the number of small 
businesses 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 businesses?
    1. What is the need for and objective of the rule?
    Changes in industry structure, technological changes, productivity 
growth, mergers and acquisitions, and updated industry definitions have 
changed the structure of many the industries covered by this proposed 
rule. Such changes can be enough to support revisions to current size 
standards for some industries. Based on the analysis of the latest data 
available, SBA believes that the revised standards in this proposed 
rule more appropriately reflect the size of businesses that need 
Federal assistance. The 2010 Jobs Act also requires SBA to review all 
size standards and make necessary adjustments to reflect market 
conditions.
    2. What are SBA's description and estimate of the number of small 
businesses to which the rule will apply?
    Based on data from the 2012 Economic Census, SBA estimates that 
there are about 2.02 million small firms covered by this rulemaking 
under industries with proposed changes to size standards. If the 
proposed rule is adopted in its present form, SBA estimates that an 
additional 49,415 businesses will become small.
    3. What are the projected reporting, record keeping and other 
compliance requirements of the rule?
    The proposed size standard changes impose no additional reporting 
or record keeping requirements on small businesses. However, qualifying 
for Federal procurement and a number of other programs requires that 
businesses register in SAM and self-certify that they are small at 
least once annually. Therefore, businesses opting to participate in 
those programs must comply with SAM requirements. There are no costs 
associated with SAM registration or certification. Changing size 
standards alters the access to SBA's programs that assist small 
businesses but does not impose a regulatory burden because they neither 
regulate nor control business behavior.
    4. What are the relevant Federal rules, which may duplicate, 
overlap or conflict with the rule?
    Under section 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.
    However, SBA considered two alternatives to its proposal to 
increase 68 size standards and maintain 35 size standards at their 
current levels. The first alternative SBA considered was adopting size 
standards based solely on the analytical results. In other words, the 
size standards of 68 industries for which the analytical results 
suggest raising size standards would be raised. However, the size 
standards of 35 industries for which the analytical results suggest 
lowering size standards would be lowered. This would cause a 
significant number of small businesses to lose their small business 
status, especially in the construction sector. Under the second 
alternative, in view of the COVID-19 pandemic, SBA considered retaining 
all size standards at the current levels, even though the analytical 
results may suggest increasing 68 size standards and decreasing 35. 
Retaining all size standards at their current levels would be more 
onerous for the small businesses than the option of adopting 68 
increases and retaining the rest of size standards. Additionally, for 
the first time, SBA evaluated 46 agricultural industries in this 
proposed rule, and postponing the adoption of the calculated size 
standards would be detrimental for the small businesses within these 
industries.

Executive Order 13563

    Executive Order 13563 emphasizes the importance of quantifying both 
costs and benefits, reducing costs, harmonizing rules, and promoting 
flexibility. A description of the need for this regulatory action and 
benefits and costs associated with this action including possible 
distributional impacts that relate to Executive Order 13563 is included 
above in the Regulatory Impact Analysis under Executive Order 12866. 
Additionally, Executive Order 13563, section 6, calls for retrospective 
analyses of existing rules.
    The review of size standards in the industries covered by this 
proposed rule is consistent with section 6 of Executive Order 13563 and 
the 2010 Jobs Act which requires SBA to review all size standards and 
make necessary adjustments to reflect market conditions. Specifically, 
the 2010 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 
(September 27, 2010) and to review all size standards not less 
frequently than once every five years, thereafter. SBA had already 
launched a comprehensive review of size standards in 2007. In 
accordance with the Jobs Act, SBA completed the comprehensive review of 
the small business size standard for each industry, except those for 
agricultural enterprises previously set by Congress, and made 
appropriate adjustments to size standards for a number of industries to 
reflect current Federal and industry market conditions. The first 
comprehensive review was completed in 2015. Prior to 2007, the last 
time SBA conducted a comprehensive review of all size standards was 
during the late 1970s and early 1980s.
    SBA issued a White Paper entitled ``Size Standards Methodology'' 
and published a notice in the April 11, 2019, edition of the Federal 
Register (84 FR 14587) to advise the public that the document is 
available for public review and comments. The ``Size Standards 
Methodology'' White Paper explains

[[Page 62264]]

how SBA establishes, reviews, and modifies its receipts-based and 
employee-based small business size standards. SBA gave appropriate 
consideration to all input, suggestions, recommendations, and relevant 
information obtained from industry groups, individual businesses, and 
Federal agencies in developing size standards for those industries 
covered by this proposed rule.

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 will not impose any new reporting or 
record keeping requirements.

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 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(a)(36), 662, and 
694a(9); Pub. L. 116-136, Section 1114.

0
2. In Sec.  121.201 amend the table ``Small Business Size Standards by 
NAICS Industry'' as follows:
0
a. Revise Subsector 111, entries ``112111'', ``112112'', ``112120'', 
``112210'', ``112320'' through ``112340'', ``112390'', ``112410'', 
``112420'', ``112511'', ``112512'', ``112519'', ``112910'' through 
``112930'', ``112990'', ``113110'', ``113210'', ``114112'', ``114119'', 
``114210'', entries ``115111'' through ``115113'', ``115116'', 
``115210'' ``115310'', ``115310 first and second sub-entry'', entries 
``213113'' through ``213115'', ``221310'' through ``221330'', 
``237990'', ``237990 sub-entry'', and ``238290'';
0
b. Revise footnote 2;
0
c. Redesignate footnote 17 as footnote 1;
0
d. Redesignate footnote 20 as footnote 15;
0
e. Redesignate footnote 19 as footnote 17;
0
f. Revise Editorial Note 1; and
0
g. Remove Editorial Note 2.
    The revisions 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 title     in millions of     in number of
                                                                                   dollars          employees
----------------------------------------------------------------------------------------------------------------
                              Sector 11--Agriculture, Forestry, Fishing and Hunting
                                         Subsector 111--Crop Production
----------------------------------------------------------------------------------------------------------------
111110......................................  Soybean Farming...............              $2.0  ................
111120......................................  Oilseed (except Soybean)                     2.0  ................
                                               Farming.
111130......................................  Dry Pea and Bean Farming......               2.5  ................
111140......................................  Wheat Farming.................               2.0  ................
111150......................................  Corn Farming..................              2.25  ................
111160......................................  Rice Farming..................              2.25  ................
111191......................................  Oilseed and Grain Combination                2.0  ................
                                               Farming.
111199......................................  All Other Grain Farming.......               2.0  ................
111211......................................  Potato Farming................              3.75  ................
111219......................................  Other Vegetable (except                     3.25  ................
                                               Potato) and Melon Farming.
111310......................................  Orange Groves.................               3.5  ................
111320......................................  Citrus (except Orange) Groves.              3.75  ................
111331......................................  Apple Orchards................               4.0  ................
111332......................................  Grape Vineyards...............               3.5  ................
111333......................................  Strawberry Farming............              4.75  ................
111334......................................  Berry (except Strawberry)                   3.25  ................
                                               Farming.
111335......................................  Tree Nut Farming..............              3.25  ................
111336......................................  Fruit and Tree Nut Combination               4.5  ................
                                               Farming.
111339......................................  Other Noncitrus Fruit Farming.               3.0  ................
111411......................................  Mushroom Production...........               4.0  ................
111419......................................  Other Food Crops Grown Under                 4.0  ................
                                               Cover.
111421......................................  Nursery and Tree Production...              2.75  ................
111422......................................  Floriculture Production.......              3.25  ................
111910......................................  Tobacco Farming...............              2.25  ................
111920......................................  Cotton Farming................              2.75  ................
111930......................................  Sugarcane Farming.............               4.5  ................
111940......................................  Hay Farming...................              2.25  ................
111991......................................  Sugar Beet Farming............              2.25  ................
111992......................................  Peanut Farming................              2.25  ................
111998......................................  All Other Miscellaneous Crop                2.25  ................
                                               Farming.
----------------------------------------------------------------------------------------------------------------

[[Page 62265]]

 
                                Subsector 112--Animal Production and Aquaculture
----------------------------------------------------------------------------------------------------------------
112111......................................  Beef Cattle Ranching and                    2.25  ................
                                               Farming.
112112......................................  Cattle Feedlots...............              19.5  ................
112120......................................  Dairy Cattle and Milk                       3.25  ................
                                               Production.
112210......................................  Hog and Pig Farming...........               3.5  ................
 
                                                  * * * * * * *
112320......................................  Broilers and Other Meat Type                 3.0  ................
                                               Chicken Production.
112330......................................  Turkey Production.............              3.25  ................
112340......................................  Poultry Hatcheries............               3.5  ................
112390......................................  Other Poultry Production......              3.25  ................
112410......................................  Sheep Farming.................               3.0  ................
112420......................................  Goat Farming..................              2.25  ................
112511......................................  Finfish Farming and Fish                    3.25  ................
                                               Hatcheries.
112512......................................  Shellfish Farming.............              3.25  ................
112519......................................  Other Aquaculture.............              3.25  ................
112910......................................  Apiculture....................              2.75  ................
112920......................................  Horses and Other Equine                      2.5  ................
                                               Production.
112930......................................  Fur-Bearing Animal and Rabbit               3.25  ................
                                               Production.
112990......................................  All Other Animal Production...               2.5  ................
----------------------------------------------------------------------------------------------------------------
                                       Subsector 113--Forestry and Logging
----------------------------------------------------------------------------------------------------------------
113110......................................  Timber Tract Operations.......              16.5  ................
113210......................................  Forest Nurseries and Gathering              18.0  ................
                                               of Forest Products.
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
                                  Subsector 114--Fishing, Hunting and Trapping
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
114112......................................  Shellfish Fishing.............              12.5  ................
114119......................................  Other Marine Fishing..........              10.0  ................
114210......................................  Hunting and Trapping..........               7.5  ................
----------------------------------------------------------------------------------------------------------------
                         Subsector 115--Support Activities for Agriculture and Forestry
----------------------------------------------------------------------------------------------------------------
115111......................................  Cotton Ginning................              14.0  ................
115112......................................  Soil Preparation, Planting,                  8.5  ................
                                               and Cultivating.
115113......................................  Crop Harvesting, Primarily by               12.0  ................
                                               Machine.
 
                                                  * * * * * * *
115116......................................  Farm Management Services......              13.5  ................
115210......................................  Support Activities for Animal                9.5  ................
                                               Production.
115310......................................  Support Activities for                      10.0  ................
                                               Forestry.
115310 (Exception 1)........................  Forest Fire Suppression \1\...          25.0 \1\  ................
115310 (Exception 2)........................  Fuels Management Services \1\.          25.0 \1\  ................
----------------------------------------------------------------------------------------------------------------
                            Sector 21--Mining, Quarrying, and Oil and Gas Extraction
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
                                  Subsector 213--Support Activities for Mining
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
213113......................................  Support Activities for Coal                 24.0  ................
                                               Mining.
213114......................................  Support Activities for Metal                36.0  ................
                                               Mining.
213115......................................  Support Activities for                      18.0  ................
                                               Nonmetallic Minerals (except
                                               Fuels) Mining.
----------------------------------------------------------------------------------------------------------------
                                              Sector 22--Utilities
                                            Subsector 221--Utilities
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
221310......................................  Water Supply and Irrigation                 36.0  ................
                                               Systems.
221320......................................  Sewage Treatment Facilities...              31.0  ................

[[Page 62266]]

 
221330......................................  Steam and Air-Conditioning                  26.5  ................
                                               Supply.
----------------------------------------------------------------------------------------------------------------
                                             Sector 23--Construction
                                    Subsector 236--Construction of Buildings
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
                             Subsector 237--Heavy and Civil Engineering Construction
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
237990......................................  Other Heavy and Civil                       39.5  ................
                                               Engineering Construction.
237990 (Exception)..........................  Dredging and Surface Cleanup            33.0 \2\  ................
                                               Activities \2\.
----------------------------------------------------------------------------------------------------------------
                                   Subsector 238--Specialty Trade Contractors
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
238290......................................  Other Building Equipment                    19.5  ................
                                               Contractors.
 
                                                  * * * * * * *
511210......................................  Software Publishers \15\......         41.5 \15\  ................
 
                                                  * * * * * * *
                                              Sector 92--Public               ................  ................
                                               Administration \17\.
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
Footnotes
\1\ NAICS code 115310--Support Activities for Forestry: Forest Fire Suppression and Fuels Management Services
  are two components of Support Activities for Forestry. Forest Fire Suppression includes establishments which
  provide services to fight forest fires. These firms usually have fire-fighting crews and equipment. Fuels
  Management Services firms provide services to clear land of hazardous materials that would fuel forest fires.
  The treatments used by these firms may include prescribed fire, mechanical removal, establishing fuel breaks,
  thinning, pruning, and piling.
\2\ NAICS code 237990--Dredging: To be considered small for purposes of Government procurement, a firm or its
  similarly situated subcontractors must perform at least 40 percent of the volume dredged with its own
  equipment or equipment owned by another small dredging concern.
\15\ NAICS code 511210--For purposes of Government procurement, the purchase of software subject to potential
  waiver of the nonmanufacturer rule pursuant to Sec.   121.1203(d) should be classified under this NAICS code.
\17\ NAICS Sector 92--Small business size standards are not established for this sector. Establishments in the
  Public Administration sector are Federal, State, and local government agencies which administer and oversee
  government programs and activities that are not performed by private establishments. Concerns performing
  operational services for the administration of a government program are classified under the NAICS private
  sector industry based on the activities performed. Similarly, procurements for these types of services are
  classified under the NAICS private sector industry that best describes the activities to be performed. For
  example, if a government agency issues a procurement for law enforcement services, the requirement would be
  classified using one of the NAICS industry codes under NAICS industry 56161, Investigation, Guard, and Armored
  Car Services.

* * * * *

    Editorial Note: For Federal Register citations affecting Sec.  
121.201, see the List of CFR Sections Affected, which appears in the 
Finding Aids section of the printed volume and at www.govinfo.gov.

Jovita Carranza,
Administrator.
[FR Doc. 2020-21589 Filed 10-1-20; 8:45 am]
BILLING CODE 8026-03-P