[Federal Register Volume 85, Number 220 (Friday, November 13, 2020)]
[Proposed Rules]
[Pages 72584-72608]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-24903]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 85, No. 220 / Friday, November 13, 2020 /
Proposed Rules
[[Page 72584]]
SMALL BUSINESS ADMINISTRATION
13 CFR Part 121
RIN 3245-AG91
Small Business Size Standards: Professional, Scientific and
Technical Services; Management of Companies and Enterprises;
Administrative and Support and Waste Management and Remediation
Services
AGENCY: U.S. Small Business Administration.
ACTION: Proposed rule.
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SUMMARY: The U.S. Small Business Administration (SBA) proposes to
increase its receipts-based small business size definitions (commonly
referred to as ``size standards'') for North American Industry
Classification System (NAICS) sectors related to Professional,
Scientific and Technical Services; Management of Companies and
Enterprises; Administrative and Support and Waste Management and
Remediation Services. SBA proposes to increase size standards for 46
industries in those sectors, including 27 industries in NAICS Sector 54
(Professional, Scientific and Technical Services), 2 industries in
Sector 55 (Management of Companies and Enterprises), and 17 industries
in Sector 56 (Administrative and Support and Waste Management and
Remediation Services). 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
January 12, 2021.
ADDRESSES: Identify your comments by RIN 3245-AG91 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:
Discussion of Size Standards
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 Small Business Jobs Act of
2010 (Pub. L. 111-240, 124 Stat. 2504, September 27, 2010) (``Jobs
Act''), requiring SBA to review all size standards every 5 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 45 industries and 3 exceptions within
NAICS Sector 54 (Professional, Scientific and Technical Services), 2
industries within Sector 55 (Management of Companies and Enterprises),
and 44 industries in Sector 56 (Administrative and Support and Waste
Management and Remediation Services). 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 increasing size standards for 37
industries and maintaining current size standards for 11 industries in
Sector 54 (77 FR 10943, February 10, 2012), increasing size standards
for 2 industries in Sector 55 (78 FR 37409, June 20, 2013), and
increasing size standards in 37 industries and retaining existing size
standards in 7 industries in Sector 56 (77 FR 72291, December 6, 2012).
Table 1, Size Standards Revisions During the First 5-Year Review,
provides a summary of these revisions by NAICS sector.
Table 1--Size Standards Revisions During the First 5-Year Review
----------------------------------------------------------------------------------------------------------------
Number of Number of Number of Number of
Sector Sector name size standards size standards size standards size standards
reviewed increased decreased maintained
----------------------------------------------------------------------------------------------------------------
54........................ Professional, 48 37 0 11
Scientific and
Technical Services.
55........................ Management of 2 2 0 0
Companies and
Enterprises.
[[Page 72585]]
56........................ Administrative and 44 37 0 7
Support and Waste
Management and
Remediation
Services.
---------------------------------------------------------------
Total................. .................... 94 76 0 18
----------------------------------------------------------------------------------------------------------------
Currently, there are 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). 16 of these size
levels are based on average annual receipts, 9 are based on average
number of employees, and 2 are based on other measures.
SBA also adjusts its monetary-based size standards for inflation at
least once every 5 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 5 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, it 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 of Federal contract
dollars relative to the small business share of total industry
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 cited
above.
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 in the Industry
Analysis section below. 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 of Federal contract dollars and the
small business share of total industry 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 in the Industry Analysis
section below.
SBA does not apply all aspects of its Methodology to all proposed
rules because not all features are relevant for 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
[[Page 72586]]
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, $7.0 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 $23.0 million and
$35.5 million, with the weighted average size standard for the group
equaling $29.0 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, and
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. 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
[[Page 72587]]
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 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 attributable 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
total receipts within an industry. 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
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 either estimated
missing values using available relevant data or examined data at a
higher level of industry aggregation, such as at the NAICS Sector (2-
digit), Subsector (3-digit), or Industry Group (4-digit) 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
[[Page 72588]]
(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 asset-based size standards, SBA
examines the data from the Statistics on Depository Institutions (SDI)
database (www5.fdic.gov/sdi/main.asp) of the Federal Depository
Insurance Corporation (FDIC) data. 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 (SAM) (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 the
SBA Administrator. SBA considers as part of its evaluation whether a
business concern at a proposed size standard would be dominant in its
field of operation. For this, SBA generally examines the industry's
market share of firms at the proposed 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, which 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 has 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 that 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
$6.0 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 in
SBA's existing size standards. The industry data suggests that $6.0
million minimum and $41.5 million maximum size standards would be too
high for agricultural industries. Accordingly, SBA has established $1.0
million as the minimum size standard and $5.0 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: 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 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
[[Page 72589]]
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
$250,000.
Table 2, 20th and 80th Percentiles of Industry Factors for
Receipts-Based Size Standards, shows the 20th percentile and 80th
percentile values for average firm size (simple and weighted), average
assets size, 4-firm concentration ratio, and Gini coefficient for
industries with receipts-based size standards.
Table 2--20th and 80th Percentiles of Industry Factors for Receipts-Based Size Standards
--------------------------------------------------------------------------------------------------------------------------------------------------------
Simple average Weighted average Average assets 4-Firm
Industries/percentiles receipts size receipts size ($ size ($ concentration Gini 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% 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 on its website 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 of 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 72590]]
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:
< $15.0 million.................. No change.............. Increase 30%........... Increase 60%.
$15.0 million to < $25.0 million. No change.............. Increase 20%........... Increase 40%.
$25.0 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% went to small businesses, and if that small businesses
accounted for 40% of total receipts of that industry, the small
business share of total Federal contract dollars would be 25% less than
the small business share of total industry receipts (40%-15%).
According to the adjustment above, 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 61 industries covered by this proposed rule--31 in
Sector 54, and 30 in Sector 56--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 28 of these industries, prompting an upward adjustment of
their existing size standards based on that factor. For the remaining
33 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), 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 (the size
standard for average firm size is an average of size standards
supported by simple average firm size and weighted average firm size),
rounded to the nearest $500,000 for non-agriculture industries and
rounded to the nearest $250,000 for agriculture industries. Analytical
details involved in the averaging procedure are described in SBA's
Methodology, which is available on its website at www.sba.gov/size. For
comparison with the calculated new size standards, the current size
standards are in column 10 of Table 4.
Table 4--Size Standards Supported by Each Factor for Each Industry (Receipts)
[Upper value = calculated factor, lower value = size standard supported]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Simple Weighted Calculated Current
average average Average Four-firm Gini Federal size size
NAICS code NAICS industry title Type firm size firm size assets size ratio % coefficient contract standard ($ standard ($
($ million) ($ million) ($ million) factor (%) million) million)
(1) (2)............ (3) (4) (5) (6) (7) (8) (9) (10)
--------------------------------------------------------------------------------------------------------------------------------------------------------
541110 Offices of Lawyers...... Factor......... $1.5 $223.3 $0.3 2.7 0.775 -20.8 $13.5 $12.0
Size Std....... 10.5 15.0 8.0 $6.0 $24.0 $15.5
541191 Title Abstract and Factor......... 1.3 278.1 0.5 27.5 0.763 ........... 17.0 12.0
Settlement Offices. Size Std....... 9.5 16.5 8.5 $23.5 $22.0
541199 All Other Legal Services Factor......... 1.1 95.9 0.4 29.6 0.792 -38.8 18.0 12.0
Size Std....... 9.0 10.5 8.0 $25.0 $27.5 $19.0
541211 Offices of Certified Factor......... 1.4 2,879.6 0.5 37.2 0.782 -14.0 23.5 22.0
Public Accountants. Size Std....... 10.5 41.5 8.5 $31.0 $25.5 $26.5
541213 Tax Preparation Services Factor......... 0.3 641.9 0.2 ........... 0.708 ........... 12.0 22.0
Size Std....... 6.0 28.5 7.0 $12.0
541214 Payroll Services........ Factor......... 6.5 2,094.0 2.9 49.6 0.854 ........... 34.5 22.0
Size Std....... 30.5 41.5 22.5 $40.5 $38.5
541219 Other Accounting Factor......... 0.5 282.8 0.2 18.8 0.751 -35.3 17.5 22.0
Services. Size Std....... 6.5 17.0 7.0 $16.5 $20.0 $31.0
541310 Architectural Services.. Factor......... 1.4 54.8 0.5 5.8 0.748 -12.8 11.0 8.0
Size Std....... 10.5 9.0 9.0 $6.5 $19.5 $10.5
541320 Landscape Architectural Factor......... 0.6 4.3 0.2 4.5 0.642 ........... 6.5 8.0
Services. Size Std....... 7.0 7.5 7.0 $6.0 $6.0
541330 Engineering Services.... Factor......... 4.5 1,396.0 1.7 13.1 0.839 0.1 22.5 16.5
Size Std....... 23.0 41.5 16.0 $12.0 $36.0 $16.5
[[Page 72591]]
Except Military and Aerospace Factor......... 3,225.7 70,551.0 1,271.8 35.7 0.883 12.6 39.0 41.5
Equipment and Military Weapons. Size Std....... 41.5 41.5 41.5 $30.0 $41.5 $41.5
Except Contracts and Factor......... ........... ........... ........... ........... ........... ........... 39.0 41.5
Subcontracts for Engineering Size Std.......
Services Awarded Under the
National Energy Policy Act of
1992.
Except Marine Engineering and Factor......... 2,639.7 73,130 1,055.9 52.5 0.882 3.4 41.5 41.5
Naval Architecture. Size Std....... 41.5 41.5 41.5 $41.5 $41.5 $41.5
541340 Drafting Services....... Factor......... 0.4 2.9 0.1 7.2 0.673 ........... 7.0 8.0
Size Std....... 6.0 7.5 7.0 $7.5 $6.0
541350 Building Inspection Factor......... 0.4 18.1 0.1 12.5 0.702 -65.2 10.0 8.0
Services. Size Std....... 6.0 8.0 7.0 $11.5 $11.0 $13.0
541360 Geophysical Surveying Factor......... 4.5 201.6 1.7 43.2 0.861 -3.5 25.0 16.5
and Mapping Services. Size Std....... 22.5 14.0 15.5 $35.5 $40.0 $16.5
541370 Surveying and Mapping Factor......... 0.7 57.4 0.3 16.6 0.730 -42.3 14.0 16.5
(except Geophysical) Services. Size Std....... 7.5 9.5 7.5 $15.0 $16.0 $23.0
541380 Testing Laboratories.... Factor......... 3.0 111.5 1.3 13.2 0.766 -16.8 16.5 16.5
Size Std....... 16.5 11.0 13.5 $12.0 $22.5 $20.0
541410 Interior Design Services Factor......... 0.7 4.6 0.2 2.4 0.640 ........... 6.5 8.0
Size Std....... 7.5 7.5 7.0 $6.0 $6.0
541420 Industrial Design Factor......... 1.2 37.4 0.5 24.3 0.756 ........... 15.0 8.0
Services. Size Std....... 9.5 8.5 8.5 $21.0 $21.0
541430 Graphic Design Services. Factor......... 0.5 6.7 0.2 3.5 0.688 16.5 7.5 8.0
Size Std....... 6.5 7.5 7.0 $6.0 $8.5 $8.0
541490 Other Specialized Design Factor......... 0.8 14.7 0.3 15.3 0.741 ........... 12.0 8.0
Services. Size Std....... 8.0 8.0 7.5 $14.0 $18.0
541511 Custom Computer Factor......... 2.0 616.8 0.7 11.8 0.813 -7.3 20.5 30.0
Programming Services. Size Std....... 12.5 28.0 9.5 $11.0 $31.0 $30.0
541512 Computer Systems Design Factor......... 4.3 3,438.4 1.3 24.4 0.859 8.0 27.0 30.0
Services. Size Std....... 22.0 41.5 13.0 $21.0 $39.5 $30.0
541513 Computer Facilities Factor......... 5.8 7,617.4 1.7 59.2 0.866 27.1 32.5 30.0
Management Services. Size Std....... 28.0 41.5 15.5 $41.5 $40.5 $30.0
541519 Other Computer Related Factor......... 1.9 268.0 0.5 20.1 0.829 11.6 21.0 30.0
Services. Size Std....... 12.0 16.5 9.0 $17.5 $34.0 $30.0
541611 Administrative Factor......... 1.6 2,532.2 0.5 27.9 0.824 4.8 21.5 16.5
Management and General Size Std....... 11.0 41.5 9.0 $23.5 $33.0 $16.5
Management Consulting Services.
541612 Human Resources Factor......... 2.6 1,154.7 0.7 42.7 0.843 20.8 25.5 16.5
Consulting Services. Size Std....... 15.0 41.5 10.0 $35.0 $36.5 $16.5
541613 Marketing Consulting Factor......... 1.1 95.4 0.4 8.1 0.781 -28.1 14.5 16.5
Services. Size Std....... 9.0 10.5 8.0 $8.0 $25.5 $20.0
541614 Process, Physical Factor......... 2.0 113.9 0.7 15.3 0.814 -11.2 17.5 16.5
Distribution, and Logistics Size Std....... 12.5 11.0 10.0 $13.5 $31.0 $20.0
Consulting Services.
541618 Other Management Factor......... 0.6 17.8 0.2 9.8 0.735 -42.9 13.0 16.5
Consulting Services. Size Std....... 7.5 8.0 7.5 $9.5 $17.0 $23.0
541620 Environmental Consulting Factor......... 1.5 51.8 0.6 8.4 0.773 3.2 13.5 16.5
Services. Size Std....... 11.0 9.0 9.5 $8.5 $24.0 $16.5
541690 Other Scientific and Factor......... 1.2 135.7 0.4 11.6 0.787 -22.9 15.5 16.5
Technical Consulting Services. Size Std....... 9.5 12.0 8.5 $11.0 $26.5 $20.0
541720 Research and Development Factor......... 3.5 208.8 2.4 31.9 0.830 -21.7 24.5 22.0
in the Social Sciences and Size Std....... 19.0 14.5 19.0 $26.5 $34.0 $26.5
Humanities.
541810 Advertising Agencies.... Factor......... 2.9 896.3 0.9 30.1 0.801 -20.8 22.5 16.5
Size Std....... 16.0 37.0 11.0 $25.5 $29.0 $20.0
541820 Public Relations Factor......... 1.3 137.2 0.4 21.6 0.757 5.6 15.0 16.5
Agencies. Size Std....... 10.0 12.0 8.0 $18.5 $21.0 $16.5
541830 Media Buying Agencies... Factor......... 8.4 283.3 2.6 35.7 0.838 ........... 28.5 16.5
Size Std....... 38.5 17.0 20.5 $30.0 $35.5
541840 Media Representatives... Factor......... 2.3 79.4 0.8 26.0 0.807 ........... 18.5 16.5
Size Std....... 14.0 10.0 10.5 $22.0 $30.0
541850 Outdoor Advertising..... Factor......... 3.3 622.5 2.8 54.8 0.842 ........... 30.5 16.5
Size Std....... 18.0 28.0 21.5 $41.5 $36.5
541860 Direct Mail Advertising. Factor......... 3.8 265.8 1.4 24.4 0.781 ........... 19.5 16.5
Size Std....... 20.0 16.0 14.0 $21.0 $25.5
541870 Advertising Material Factor......... 3.8 156.6 1.5 41.4 0.839 ........... 25.0 16.5
Distribution Services. Size Std....... 20.0 12.5 14.0 $34.0 $36.0
541890 Other Services Related Factor......... 1.8 89.4 0.6 13.1 0.780 -42.3 16.0 16.5
to Advertising. Size Std....... 12.0 10.5 9.0 $12.0 $25.0 $23.0
541910 Marketing Research and Factor......... 3.6 339.8 1.3 21.6 0.815 11.4 20.0 16.5
Public Opinion Polling. Size Std....... 19.5 18.5 13.5 $18.5 $31.5 $16.5
541921 Photography Studios, Factor......... 0.4 129.9 0.2 28.3 0.727 ........... 14.0 8.0
Portrait. Size Std....... 6.5 11.5 7.0 $24.0 $15.5
541922 Commercial Photography.. Factor......... 0.5 5.4 0.2 7.9 0.674 -50.2 8.0 8.0
Size Std....... 6.5 7.5 7.0 $8.0 $6.0 $13.0
541930 Translation and Factor......... 1.9 218.3 0.6 39.3 0.840 1.3 20.0 8.0
Interpretation Services. Size Std....... 12.0 14.5 9.5 $32.5 $36.0 $8.0
541940 Veterinary Services..... Factor......... 1.1 106.9 0.3 9.2 0.529 -64.5 9.0 8.0
Size Std....... 9.0 11.0 7.5 $9.0 $6.0 $13.0
541990 All Other Professional, Factor......... 1.0 194.6 0.3 19.1 0.784 -34.1 17.0 16.5
Scientific and Technical Size Std....... 8.5 14.0 8.0 $17.0 $26.0 $23.0
Services.
551111 Offices of Bank Holding Factor......... 10.1 402.8 5.9 ........... 0.818 ........... 34.0 22.0
Companies. Size Std....... 41.5 21.0 39.0 $32.0
551112 Offices of Other Holding Factor......... 10.8 2,312.4 13.5 ........... 0.848 ........... 40.0 22.0
Companies. Size Std....... 41.5 41.5 41.5 $37.5
561110 Office Administrative Factor......... 1.5 25.7 0.6 2.1 0.761 32.7 11.0 8.0
Services. Size Std....... 10.5 8.0 9.5 $6.0 $21.5 $8.0
561210 Facilities Support Factor......... 13.8 665.1 3.8 25.6 0.841 -5.2 32.5 41.5
Services. Size Std....... 41.5 29.5 27.5 $22.0 $36.0 $41.5
561311 Employment Placement Factor......... 2.0 242.2 0.4 23.7 0.797 -21.8 21.0 30.0
Agencies. Size Std....... 12.5 15.5 8.0 $20.5 $28.0 $34.5
[[Page 72592]]
561312 Executive Search Factor......... 1.0 61.7 0.2 17.9 0.726 ........... 12.0 30.0
Services. Size Std....... 8.5 9.5 7.0 $16.0 $15.5
561320 Temporary Help Services. Factor......... 9.0 1,130.0 1.7 14.0 0.819 48.5 26.5 30.0
Size Std....... 41.0 41.5 15.5 $13.0 $32.0 $30.0
561330 Professional Employer Factor......... 30.7 5,898.1 4.9 43.6 0.865 80.2 36.5 30.0
Organizations. Size Std....... 41.5 41.5 33.5 $36.0 $40.5 $30.0
561410 Document Preparation Factor......... 0.8 74.8 0.3 26.6 0.790 40.9 16.5 16.5
Services. Size Std....... 8.0 10.0 7.5 $22.5 $27.0 $16.5
561421 Telephone Answering Factor......... 1.5 42.7 0.7 24.0 0.740 ........... 14.5 16.5
Services. Size Std....... 10.5 9.0 9.5 $20.5 $18.0
561422 Telemarketing Bureaus Factor......... 6.1 312.0 2.0 21.2 0.827 -19.9 22.5 16.5
and Other Contact Centers. Size Std....... 29.5 17.5 17.0 $18.5 $33.5 $20.0
561431 Private Mail Centers.... Factor......... 0.5 15.1 0.2 13.5 0.526 ........... 8.5 16.5
Size Std....... 6.5 8.0 7.0 $12.5 $6.0
561439 Other Business Service Factor......... 2.1 452.9 0.7 43.0 0.805 ........... 23.5 16.5
Centers (including Copy Shops). Size Std....... 13.5 22.5 10.0 $35.5 $29.5
561440 Collection Agencies..... Factor......... 3.1 123.3 1.1 15.2 0.792 43.6 17.0 16.5
Size Std....... 17.0 11.5 12.0 $13.5 $27.5 $16.5
561450 Credit Bureaus.......... Factor......... 19.3 824.1 6.7 59.9 0.878 22.4 36.0 16.5
Size Std....... 41.5 35.0 41.5 $41.5 $41.5 $16.5
561491 Repossession Services... Factor......... 0.8 7.6 0.2 17.1 0.663 ........... 9.0 16.5
Size Std....... 8.0 7.5 7.0 $15.0 $6.0
561492 Court Reporting and Factor......... 0.6 35.1 0.2 22.5 0.743 27.3 14.0 16.5
Stenotype Services. Size Std....... 7.0 8.5 7.5 $19.5 $18.5 $16.5
561499 All Other Business Factor......... 2.3 138.8 1.0 23.7 0.810 -17.6 19.0 16.5
Support Services. Size Std....... 14.0 12.0 11.5 $20.5 $30.5 $20.0
561510 Travel Agencies......... Factor......... 1.4 303.8 0.5 25.8 0.798 10.4 19.0 22.0
Size Std....... 10.5 17.5 8.5 $22.0 $28.5 $22.0
561520 Tour Operators.......... Factor......... 2.0 52.5 0.9 15.4 0.741 ........... 13.5 22.0
Size Std....... 13.0 9.0 11.0 $14.0 $18.0
561591 Convention and Visitors Factor......... 1.7 28.5 0.5 19.3 0.745 ........... 13.5 22.0
Bureaus. Size Std....... 11.5 8.5 9.0 $17.0 $18.5
561599 All Other Travel Factor......... 8.6 469.4 3.7 31.9 0.840 67.1 28.5 22.0
Arrangement and Reservation Size Std....... 39.5 23.0 27.0 $26.5 $36.0 $22.0
Services.
561611 Investigation Services.. Factor......... 1.1 318.4 0.3 36.2 0.810 -27.2 21.5 22.0
Size Std....... 9.0 18.0 7.5 $30.0 $30.5 $26.5
561612 Security Guards and Factor......... 3.8 908.2 0.8 35.1 0.845 1.3 25.5 22.0
Patrol Services. Size Std....... 20.0 37.5 10.5 $29.5 $37.0 $22.0
561613 Armored Car Services.... Factor......... 22.7 509.9 5.1 89.6 0.871 ........... 38.0 22.0
Size Std....... 41.5 24.5 35.0 $41.5 $41.5
561621 Security Systems Factor......... 2.7 479.5 1.2 23.9 0.797 0.2 20.5 22.0
Services (except Locksmiths). Size Std....... 15.5 23.5 12.5 $20.5 $28.0 $22.0
561622 Locksmiths.............. Factor......... 0.5 5.0 0.2 8.3 0.603 ........... 7.0 22.0
Size Std....... 6.5 7.5 7.0 $8.5 $6.0
561710 Exterminating and Pest Factor......... 0.9 328.1 0.3 28.1 0.752 21.5 15.5 12.0
Control Services. Size Std....... 8.5 18.5 7.5 $24.0 $20.0 $12.0
561720 Janitorial Services..... Factor......... 0.7 201.8 0.2 11.2 0.785 26.6 15.0 19.5
Size Std....... 7.5 14.0 7.0 $10.5 $26.0 $19.5
561730 Landscaping Services.... Factor......... 0.6 168.6 0.2 9.6 0.688 11.3 8.5 8.0
Size Std....... 7.0 13.0 7.0 $9.5 $8.5 $8.0
561740 Carpet and Upholstery Factor......... 0.4 14.3 0.1 9.4 0.673 ........... 7.5 6.0
Cleaning Services. Size Std....... 6.5 8.0 7.0 $9.0 $6.0
561790 Other Services to Factor......... 0.5 13.0 0.2 7.1 0.645 -46.7 8.0 8.0
Buildings and Dwellings. Size Std....... 6.5 8.0 7.0 $7.5 $6.0 $13.0
561910 Packaging and Labeling Factor......... 4.0 59.3 1.5 14.0 0.781 -13.8 17.0 12.0
Services. Size Std....... 21.0 9.5 14.5 $13.0 $25.5 $15.5
561920 Convention and Trade Factor......... 2.6 287.8 0.9 24.0 0.800 46.7 17.5 12.0
Show Organizers. Size Std....... 15.5 17.0 11.0 $20.5 $28.5 $12.0
561990 All Other Support Factor......... 1.7 119.3 0.8 10.9 0.779 -28.2 14.5 12.0
Services. Size Std....... 11.5 11.5 10.5 $10.5 $25.0 $15.5
562111 Solid Waste Collection.. Factor......... 5.4 3,163.1 3.2 46.6 0.821 38.2 34.0 41.5
Size Std....... 26.5 41.5 23.5 $38.5 $32.5 $41.5
562112 Hazardous Waste Factor......... 7.0 129.9 4.1 43.5 0.789 33.3 31.0 41.5
Collection. Size Std....... 33.0 11.5 29.0 $36.0 $27.0 $41.5
562119 Other Waste Collection.. Factor......... 2.1 103.4 1.2 41.4 0.779 -26.1 25.0 41.5
Size Std....... 13.0 11.0 13.0 $34.0 $25.0 $41.5
562211 Hazardous Waste Factor......... 15.6 569.0 10.4 49.9 0.840 -10.2 39.0 41.5
Treatment and Disposal. Size Std....... 41.5 26.5 41.5 $41.0 $36.0 $41.5
562212 Solid Waste Landfill.... Factor......... 7.5 834.7 6.8 64.6 0.845 ........... 39.0 41.5
Size Std....... 35.0 35.0 41.5 $41.5 $37.0
562213 Solid Waste Combustors Factor......... 56.6 1,040.3 43.5 92.5 0.863 ........... 41.0 41.5
and Incinerators. Size Std....... 41.5 41.5 41.5 $41.5 $40.0
562219 Other Nonhazardous Waste Factor......... 3.4 29.0 2.8 40.2 0.711 -22.5 24.5 41.5
Treatment and Disposal. Size Std....... 18.5 8.5 21.5 $33.5 $12.5 $41.5
562910 Remediation Services.... Factor......... 4.3 128.5 2.0 13.3 0.774 -8.3 18.5 22.0
Size Std....... 22.0 11.5 17.0 $12.0 $24.0 $22.0
562920 Materials Recovery Factor......... 5.2 276.0 2.5 28.8 0.753 ........... 21.5 22.0
Facilities. Size Std....... 25.5 16.5 20.0 $24.5 $20.5
562991 Septic Tank and Related Factor......... 0.8 16.1 0.4 11.4 0.642 9.2 8.0 8.0
Services. Size Std....... 8.0 8.0 8.0 $10.5 $6.0 $8.0
562998 All Other Miscellaneous Factor......... 1.7 45.4 0.9 26.2 0.714 ........... 14.5 8.0
Waste Management Services. Size Std....... 11.5 9.0 11.0 $22.5 $13.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 72593]]
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 proposed rule using the procedures
described in the revised SBA's Methodology. The results of that
analysis are discussed in the following subsection.
Exceptions to NAICS 541330: Military and Aerospace Equipment and
Military Weapons; Contracts and Subcontracts for Engineering Services
Awarded Under the National Energy Policy Act of 1992; Marine
Engineering and Naval Architecture
Currently, NAICS 541330 has four size standards that apply to
Federal contracts for different types of engineering services. The
$16.5 million size standard is for general engineering services, while
the $41.5 million size standard for the three exceptions apply to
specialized types of engineering services that the Federal Government
procures. These exceptions apply only to Federal contracts for those
services. In the prior comprehensive review, 16 commenters addressed
SBA's proposal to retain the then current $27.0 million size standard
for the exceptions. All believed that the $27.0 million size standard
was too low and needed to be increased. Commenters expressed concern
that small firms that exceed this size standard would not be able to
compete with the midsize and very large firms that exist in this
market. Commenters also pointed out that contracts for the exceptions
tend to be large already and were trending upwards each year.
SBA agreed with commenters that the size standard for the two
engineering ``exceptions'' (Military and Aerospace Equipment and
Military Weapons, and Marine Engineering and Naval Architecture) should
be increased, and as such, SBA adopted a size standard of $35.5 million
for all three of the exceptions.\1\ Thereafter, to account for
inflation during the period, SBA increased the $35.5 million size
standard for the three exceptions to $38.5 Million in 2014 (79 FR
33647, June 12, 2014), and to the current maximum size level of $41.5
in 2019 (84 FR 34261, July 18, 2019).
---------------------------------------------------------------------------
\1\ As required by law, SBA also adopted the $35.5 million size
standard for the third ``exception'' to NAICS 541330 (Contracts and
Subcontracts for Engineering Services Awarded Under the National
Energy Policy Act of 1992). Section 3021(b)(1) of Public Law 102-
486, the National Energy Policy Act of 1992 (106 Stat. 2776, 3133)
states that ``for purposes of contracts and subcontracts requiring
engineering services (awarded under this Act) the applicable size
standard shall be that established for Military and Aerospace
Equipment and Military Weapons.''
---------------------------------------------------------------------------
As noted previously, the data from the Economic Census special
tabulation are limited down to the 6-digit NAICS industry level and
hence do not provide data to assess economic characteristics at the
subindustry level. For example, the Economic Census data for NAICS
541330 are aggregates of both general engineering services and
specialized engineering services under the three ``exceptions.'' The
lack of relevant data at the subindustry level makes it challenging to
determine whether these size standards (``exceptions'') should be
revised or left unchanged. Thus, the results based on the Economic
Census data may not accurately reflect the characteristics of
businesses providing specialized services included under those
``exceptions.''
To determine whether the Agency should propose revising the three
exceptions under NAICS 541330, SBA evaluated the data from FPDS-NG and
SAM. From FPDS-NG, SBA first identified Product Service Codes (PSCs)
that correspond to each specific subindustry activity or ``exception''
under that NAICS code and then identified firms that are active in
Federal contracting involving those PSCs. Including the exceptions, SBA
identified a total of 1,257 PSCs corresponding to the activity of
engineering services. The total average contract dollars obligated
under these PSCs was $29.9 billion. From this group, SBA identified a
subgroup of 168 PSCs corresponding to the Military and Aerospace
Equipment and Military Weapons exception, and 40 PSCs corresponding to
the Marine Engineering and Naval Architecture exception. The total
average contract dollars obligated under these PSCs was $3.2 billion
and $1.9 billion, respectively.
The data for fiscal year 2018 showed numerous firms doing contracts
under Military and Aerospace Equipment and Military Weapons and Marine
Engineering and Naval Architecture. SBA analyzed those firms' revenue
and employment data from SAM and contract dollars from FPDS-NG to
evaluate industry and Federal procurement factors. These results,
presented in Table 4 of this proposed rule, support a size standard of
$39.0 million for the Military and Aerospace Equipment and Military
Weapons Exception and $41.5 million for the Marine Engineering and
Naval Architecture. The FPDS-NG showed very few actions involving
Contracts and Subcontracts for Engineering Services Awarded Under the
National Energy Policy Act of 1992. However, for purposes of contracts
and subcontracts, the National Energy Policy Act of 1992 requires that
the applicable size standard must be established for Military and
Aerospace Equipment and Military Weapons (106 Stat. 2776, 3133).
Summary of Calculated Size Standards
Of the 91 industries and 3 subindustries (i.e. 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 46 industries,
decreasing size standards for 43 industries and 3 subindustries, and
maintaining size standards for 6 industries. Table 5, Summary of
Calculated Size Standards, summarizes these results by NAICS sector.
Table 5--Summary of Calculated Size Standards
----------------------------------------------------------------------------------------------------------------
Number of size Number of size Number of size Number of size
Sector Sector name standards standards standards standards
reviewed increased decreased maintained
----------------------------------------------------------------------------------------------------------------
54........................ Professional, 48 27 18 3
Scientific and
Technical Services.
55........................ Manag6ment of 2 2 0 0
Companies and
Enterprises.
56........................ Administrative and 44 17 24 3
Support and Waste
Management and
Remediation
Services.
---------------------------------------------------------------
Total................. .................... 94 46 42 6
----------------------------------------------------------------------------------------------------------------
[[Page 72594]]
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 proposed 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 proposed rule, more than 98.8%
of 7(a) and 504 loans in fiscal years 2016-2018 went to businesses
below the current or calculated size standards.
Proposed Changes to Size Standards
Based on the analytical results in Table 4 and considerations of
the impacts of calculated size standards in terms of access by
currently small businesses to SBA's loans, as discussed above, of a
total of 94 industries or subindustries (exceptions) with receipts-
based size standards in Sectors 54, 55, and 56 that are covered by this
proposed 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 46
industries, and retain the current size standards for the remaining 48
industries or subindustries in those sectors.
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% 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 by COVID-19. On April 24,
2020, additional funding for the CARES Act, including for the PPP, was
provided. The Paycheck Protection Program and Health Care Enhancement
Act, Public Law 116-139 (April 24, 2020).
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
homestay-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%, and the personal consumption in
goods and services decreased 6.9% in the first quarter of 2020. The
Bureau of Economic Analysis (BEA) third estimate for the second quarter
of 2020 shows that the GDP decreased 31.4%, and the personal
consumption in goods and services decreased 33.2%; In August 2020,
personal income decreased 2.7%, after having decreased by a lower
percentage in June (1.2%) and slightly increased in July 2020 (0.5%).
In September 2020, the unemployment rate declined to 7.9% from August
2020, when the unemployment rate was 8.4%. After reaching 14.7% in
April 2020, the unemployment rate has been decreasing from May to
September 2020, but still it is greater than in February 2020 when it
was 3.5%. For the month of September 2020, non-farm payroll increased
661,000 from August 2020, but the decrease in employment since February
2020 is about 10.5 million. Specifically, for the sectors evaluated in
this proposed rule, more recent data in September 2020 shows that the
unemployment rate for professional and technical services was 5.0%;
management, administrative, and waste services was 10.0%; and
administrative and support services was 10.2%. In September 2019, the
unemployment rates for these sectors were 2.5%, 4.7% and 4.9%,
respectively.\2\ The latest Federal Reserve Board's Monetary Policy
Report shows that in general the most impacted firms in these sectors
are the small businesses.\3\
---------------------------------------------------------------------------
\2\ Bureau of Labor Statistics, Table A-31, Unemployed persons
by industry, class of worker, and sex. See https://www.bls.gov/cps/cpsaat26.htm.
\3\ 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, see https://portal.census.gov/pulse/data. The latter 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 the 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 46 industries and retain the
current size standards for 48 industries or subindustries for a vast
majority of which analytical results suggested their size standards
could be lowered.
The proposed size standards are presented in Table 6, Proposed Size
Standards Revisions. Also presented in Table 6 are current and
calculated size standards for comparison.
Table 6--Proposed Size Standards Revisions
----------------------------------------------------------------------------------------------------------------
Calculated Proposed size Current size
NAICS code NAICS industry title size standard standard ($ standard ($
($ million) million) million)
----------------------------------------------------------------------------------------------------------------
541110............................ Offices of Lawyers.......... $13.5 $13.5 $12.0
541191............................ Title Abstract and 17.0 17.0 12.0
Settlement Offices.
[[Page 72595]]
541199............................ All Other Legal Services.... 18.0 18.0 12.0
541211............................ Offices of Certified Public 23.5 23.5 22.0
Accountants.
541213............................ Tax Preparation Services.... 12.0 22.0 22.0
541214............................ Payroll Services............ 34.5 34.5 22.0
541219............................ Other Accounting Services... 17.5 22.0 22.0
541310............................ Architectural Services...... 11.0 11.0 8.0
541320............................ Landscape Architectural 6.5 8.0 8.0
Services.
541330............................ Engineering Services........ 22.5 22.5 16.5
541340............................ Drafting Services........... 7.0 8.0 8.0
541350............................ Building Inspection Services 10.0 10.0 8.0
541360............................ Geophysical Surveying and 25.0 25.0 16.5
Mapping Services.
541370............................ Surveying and Mapping 14.0 16.5 16.5
(except Geophysical)
Services.
541380............................ Testing Laboratories........ 16.5 16.5 16.5
541410............................ Interior Design Services.... 6.5 8.0 8.0
541420............................ Industrial Design Services.. 15.0 15.0 8.0
541430............................ Graphic Design Services..... 7.5 8.0 8.0
541490............................ Other Specialized Design 12.0 12.0 8.0
Services.
541511............................ Custom Computer Programming 20.5 30.0 30.0
Services.
541512............................ Computer Systems Design 27.0 30.0 30.0
Services.
541513............................ Computer Facilities 32.5 32.5 30.0
Management Services.
541519............................ Other Computer Related 21.0 30.0 30.0
Services.
541611............................ Administrative Management 21.5 21.5 16.5
and General Management
Consulting Services.
541612............................ Human Resources Consulting 25.5 25.5 16.5
Services.
541613............................ Marketing Consulting 14.5 16.5 16.5
Services.
541614............................ Process, Physical 17.5 17.5 16.5
Distribution, and Logistics
Consulting Services.
541618............................ Other Management Consulting 13.0 16.5 16.5
Services.
541620............................ Environmental Consulting 13.5 16.5 16.5
Services.
541690............................ Other Scientific and 15.5 16.5 16.5
Technical Consulting
Services.
541720............................ Research and Development in 24.5 24.5 22.0
the Social Sciences and
Humanities.
541810............................ Advertising Agencies........ 22.5 22.5 16.5
541820............................ Public Relations Agencies... 15.0 16.5 16.5
541830............................ Media Buying Agencies....... 28.5 28.5 16.5
541840............................ Media Representatives....... 18.5 18.5 16.5
541850............................ Outdoor Advertising......... 30.5 30.5 16.5
541860............................ Direct Mail Advertising..... 19.5 19.5 16.5
541870............................ Advertising Material 25.0 25.0 16.5
Distribution Services.
541890............................ Other Services Related to 16.0 16.5 16.5
Advertising.
541910............................ Marketing Research and 20.0 20.0 16.5
Public Opinion Polling.
541921............................ Photography Studios, 14.0 14.0 8.0
Portrait.
541922............................ Commercial Photography...... 8.0 8.0 8.0
541930............................ Translation and 20.0 20.0 8.0
Interpretation Services.
541940............................ Veterinary Services......... 9.0 9.0 8.0
541990............................ All Other Professional, 17.0 17.0 16.5
Scientific and Technical
Services.
551111............................ Offices of Bank Holding 34.0 34.0 22.0
Companies.
551112............................ Offices of Other Holding 40.0 40.0 22.0
Companies.
561110............................ Office Administrative 11.0 11.0 8.0
Services.
561210............................ Facilities Support Services. 32.5 41.5 41.5
561311............................ Employment Placement 21.0 30.0 30.0
Agencies.
561312............................ Executive Search Services... 12.0 30.0 30.0
561320............................ Temporary Help Services..... 26.5 30.0 30.0
561330............................ Professional Employer 36.5 36.5 30.0
Organizations.
561410............................ Document Preparation 16.5 16.5 16.5
Services.
561421............................ Telephone Answering Services 14.5 16.5 16.5
561422............................ Telemarketing Bureaus and 22.5 22.5 16.5
Other Contact Centers.
561431............................ Private Mail Centers........ 8.5 16.5 16.5
561439............................ Other Business Service 23.5 23.5 16.5
Centers (including Copy
Shops).
561440............................ Collection Agencies......... 17.0 17.0 16.5
561450............................ Credit Bureaus.............. 36.0 36.0 16.5
561491............................ Repossession Services....... 9.0 16.5 16.5
561492............................ Court Reporting and 14.0 16.5 16.5
Stenotype Services.
561499............................ All Other Business Support 19.0 19.0 16.5
Services.
561510............................ Travel Agencies............. 19.0 22.0 22.0
561520............................ Tour Operators.............. 13.5 22.0 22.0
561591............................ Convention and Visitors 13.5 22.0 22.0
Bureaus.
561599............................ All Other Travel Arrangement 28.5 28.5 22.0
and Reservation Services.
561611............................ Investigation Services...... 21.5 22.0 22.0
561612............................ Security Guards and Patrol 25.5 25.5 22.0
Services.
561613............................ Armored Car Services........ 38.0 38.0 22.0
561621............................ Security Systems Services 20.5 22.0 22.0
(except Locksmiths).
[[Page 72596]]
561622............................ Locksmiths.................. 7.0 22.0 22.0
561710............................ Exterminating and Pest 15.5 15.5 12.0
Control Services.
561720............................ Janitorial Services......... 15.0 19.5 19.5
561730............................ Landscaping Services........ 8.5 8.5 8.0
561740............................ Carpet and Upholstery 7.5 7.5 6.0
Cleaning Services.
561790............................ Other Services to Buildings 8.0 8.0 8.0
and Dwellings.
561910............................ Packaging and Labeling 17.0 17.0 12.0
Services.
561920............................ Convention and Trade Show 17.5 17.5 12.0
Organizers.
561990............................ All Other Support Services.. 14.5 14.5 12.0
562111............................ Solid Waste Collection...... 34.0 41.5 41.5
562112............................ Hazardous Waste Collection.. 31.0 41.5 41.5
562119............................ Other Waste Collection...... 25.0 41.5 41.5
562211............................ Hazardous Waste Treatment 39.0 41.5 41.5
and Disposal.
562212............................ Solid Waste Landfill........ 39.0 41.5 41.5
562213............................ Solid Waste Combustors and 41.0 41.5 41.5
Incinerators.
562219............................ Other Nonhazardous Waste 24.5 41.5 41.5
Treatment and Disposal.
562910............................ Remediation Services........ 18.5 22.0 22.0
562920............................ Materials Recovery 21.5 22.0 22.0
Facilities.
562991............................ Septic Tank and Related 8.0 8.0 8.0
Services.
562998............................ All Other Miscellaneous 14.5 14.5 8.0
Waste Management Services.
----------------------------------------------------------------------------------------------------------------
Table 7, Summary of Proposed Size Standards Revisions by Sector,
below, summarizes the proposed changes to size standards by NAICS
sector.
Table 7--Summary of Proposed Size Standards Revisions by Sector
----------------------------------------------------------------------------------------------------------------
Number of Number of Number of Number of
Sector Sector name size standards size standards size standards size standards
reviewed increased decreased maintained
----------------------------------------------------------------------------------------------------------------
54........................ Professional, 48 27 0 21
Scientific and
Technical Services.
55........................ Management of 2 2 0 0
Companies and
Enterprises.
56........................ Administrative and 44 17 0 27
Support, Waste
Management and
Remediation
Services.
---------------------------------------------------------------
Total................. .................... 94 46 0 48
----------------------------------------------------------------------------------------------------------------
Evaluation of Dominance in Field of Operation
SBA has determined that for the industries 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, 0.4 percent, varying from 0.005% to 4.8%. 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. In other words, option one would entail increasing
size standards for 46 industries, decreasing them for 42 industries,
and retaining them at their current levels for 6 industries.
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 about the SBA's
policy of not lowering size standards based on the analytical results.
As part of option one, SBA also considered increasing 46 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
[[Page 72597]]
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 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 46 increases and retaining 48 size standards. 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 46 size
standards and retain 48 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 the 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 at all.
4. 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.
5. 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 proposed rule is not a
``major rule'' under the Congressional Review Act, 5 U.S.C. 800.
Regulatory Impact Analysis
1. What is the 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 5 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 proposed 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 94
industries or subindustries in NAICS Sectors 54, 55, 56 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
[[Page 72598]]
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 analyses of latest industry and Federal
contracting data, as well as consideration of the impact of size
standards changes on small businesses and significant adverse impacts
of the COVID-19 emergency on small businesses and the overall economic
activity, of the total of 94 industries in Sectors 54, 55, and 56 that
have receipts-based size standards, SBA proposes to increase size
standards for 46 industries and maintain current size standards for the
remaining 48 industries (including exceptions).
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 1,096,800 businesses in industries in Sectors 54, 55,
and 56, 97.9% are considered small under the current size standards.
That percentage varies from 65.3 percent% in Sector 55 to 98.4 percent%
in Sector 54. Based on the data from FPDS-NG for fiscal years 2016-
2018, about 39,844 unique firms in those industries received at least
one Federal contract during that period, of which 82.8 percent% were
small under the current size standards. A total of $134.1 billion in
average annual contract dollars were awarded to businesses in those
industries during the period of evaluation, and 32.8% 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, 71.2% were awarded through various small business set-aside
programs and 28.8% were awarded through non-set 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 9,664 7(a) and 504 loans in that period, totaling
about $2.9 billion, of which 86.3% was issued through the 7(a) program
and 13.7% was issued through the 504/CDC program. During fiscal years
2016-2018, small businesses in those industries also received 585 loans
through the SBA's Economic Injury Disaster Loan (EIDL) program,
totaling about $36.2 million on an annual basis. Table 8, Baseline for
All Industries, below, provides these baseline results by sector.
Table 8--Baseline for All Industries
----------------------------------------------------------------------------------------------------------------
Sector 54 Sector 55 Sector 56 Total
----------------------------------------------------------------------------------------------------------------
Baseline All Industries (current size standards) 48 2 44 94
Total firms (Economic Census)................... 760,701 7,544 328,522 1,096,767
Total small firms under current size standards 748,170 4,926 320,672 1,073,769
(Economic Census)..............................
Small firms as % of total firms................. 98.3 65.3 97.6 97.9
Total contract dollars ($ million) (FPDS-NG $96,050.0 $0.18 $38,089.1 $134,139.3
FY2016-2018)...................................
Total small business contract dollars under $34,208.0 $0.0 $9,816.8 $44,025.0
current standards ($ million) (FPDS-NG FY2016-
2018)..........................................
Small business dollars as % of total dollars 35.6% 0.6% 25.8% 32.8%
(FPDS-NG FY2016-2018)..........................
Total No. of unique firms getting contracts 26,673 3 15,709 39,844
(FPDS-NG FY2016-2018)..........................
Total No. of unique small firms getting small 21,318 1 13,349 32,996
business contracts (FPDS-NG FY2016-2018).......
Small business firms as % of total firms........ 79.9% 33.3% 85.0% 82.8%
No. of 7(a) and 504/CDC loans (FY 2016-2018).... 6,415 64 3,185 9,664
Amount of 7(a) and 504 loans ($ million) (FY $2,056.8 $41.9 $796.0 $2,894.7
2016-2018).....................................
No. of EIDL loans (FY 2016-2018)................ 406 1 178 585
Amount of EIDL loans ($ million) (FY 2016-2018). $25.2 $0.0 $11.0 $36.2
----------------------------------------------------------------------------------------------------------------
Increases to Size Standards
As stated above, of 94 receipts-based size standards in Sectors 54,
55, and 56 that are reviewed in this proposed 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 46 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
[[Page 72599]]
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 the 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 46 industries in NAICS Sectors 54, 55, and 56 for which it has
proposed to increase size standards, about 2,600 firms (see Table 9,
below), not small under the current size standards, will become small
under the proposed size standards increases and therefore become
eligible for these programs. That represents about 0.4% 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 34.7% to 37.0%.
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 464 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 $752.6 million annually. That represents a 4.0% 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 26 SBA 7(a) and 504
loans totaling about $10.6 million could be made to these newly-
qualified small businesses in those industries under the proposed size
standards. That represents a 0.4% 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 three (3) EIDL
loans, totaling about $0.15 million. Additionally, the newly-defined
small businesses would also benefit through reduced fees, less
paperwork, and fewer compliance requirements that are available to
small businesses through the Federal Government, but SBA has no data to
quantify this impact. Table 9, Impacts of Proposed Increases to Size
Standards, provides these results by NAICS sector.
Table 9--Impacts of Proposed Increases to Size Standards
----------------------------------------------------------------------------------------------------------------
Sector 54 Sector 55 Sector 56 Total
----------------------------------------------------------------------------------------------------------------
No. of industries with proposed increases to 27 2 17 46
size standards.................................
Total current small businesses in industries 462,890 4,926 176,504 644,321
with Proposed increases to size standards
(Economic Census 2012).........................
Additional firms qualifying as small under 1,345 527 710 2,582
proposed standards (2012 Economic Census)......
Percentage of additional firms qualifying as 0.3% 10.7% 0.4% 0.4%
small relative to current small businesses in
industries with proposed increases to size
standards......................................
No. of current unique small firms getting small 13,151 1 4,180 16,732
business contracts in industries with proposed
increases to size standards (FPDS-NG FY2016-
2018) \1\......................................
Additional small business firms getting small 412 0 99 464
business status (FPDS-NG FY2016-2018)..........
% increase to small businesses relative to 3.1% 0% 2.4% 2.8%
current unique small firms getting small
business contracts in industries with proposed
increases to size standards (FPDS-NG FY2016-
2018) \1\......................................
Total small business contract dollars under 16,182.3 0.0 2,851.0 19,033.0
current standards in industries with proposed
increases to size standards ($ million) (FPDS-
NG FY2016-2018)................................
Estimated small business dollars available to 651.4 0.0 101.2 752.6
newly-qualified small firms (Using avg dollars
obligated to SBs) ($ million) FPDS-NG FY 2016-
2018) \2\......................................
[[Page 72600]]
% increase to small business dollars relative to 4.0% 0.0 3.5% 4.0%
total small business contract dollars under
current standards in industries with proposed
increases to size standards....................
Total no. of 7(a) and 504 loans to small 3,795 64 1,680 5,539
business in industries with proposed increases
to size standards (FY 2016-2018)...............
Total amount of 7(a) and 504 loans to small $1,402.3 $41.9 $390.7 $1,834.9
businesses in industries with proposed
increases to size standards ($ million) (FY
2016-2018).....................................
Estimated no. of 7(a) and 504 loans to newly- 12 7 7 26
qualified small firms..........................
Estimated 7(a) and 504 loan amount to newly- $4.4 $4.6 $1.6 $10.6
qualified small firms ($ million)..............
% increase to 7(a) and 504 loan amount relative 0.2% 10.9% 0.4% 0.6%
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 businesses in 247 1 92 340
industries with proposed increases to size
standards (FY 2016-2018).......................
Total amount of EIDL loans to small businesses $17.0 $0.0 $5.3 $22.3
in industries with proposed increases to size
standards ($ million) (FY 2016-2018)...........
Estimated no. of EIDL loans to newly-qualified 1 1 1 3
small firms....................................
Estimated EIDL loan amount to newly-qualified $0.07 $0.02 $0.06 0.15
small firms ($ million)........................
% increase to EIDL loan amount relative to the 0.4% 100.0% 1.1% 0.7%
total amount of EIDL loans in industries with
proposed increases to size standards...........
----------------------------------------------------------------------------------------------------------------
\1\ Total impact represents total unique number of firms impacted to avoid double counting as some firms are
participating in more than one industry.
\2\ 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.
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% 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 72601]]
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 that
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 fewer set-aside contracts due to the
increased competition from larger 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 46 industries for which the analytical results
suggest raising size standards would be raised. However, the size
standards of 42 industries or subindustries for which the analytical
results suggest lowering size standards would be lowered. For the 6
remaining industries or subindustries, size standards would be
maintained at their current levels. 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 at the beginning of this section 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 46
size standards. Below we discuss the benefits and costs of decreasing
42 size standards.
Benefits of Decreases to Size Standards
The most significant benefit to businesses from decreases to size
standards when 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,
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 that 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 $24,762 million in small
business contracts in those 42 industries for which this Option
considered decreasing size standards. Table 10, Impacts of Decreases to
Size Standards Under Alternative Option Option One, below shows that
lowering size standards in 42 industries and subindustries would reduce
Federal contract dollars awarded to small businesses by $1,027 million
or about 4.1 percent % relative to the baseline level. Because of the
importance of these sectors for the Federal procurement, SBA may adopt
mitigating measures to reduce the negative impact under the assumptions
of Option One. SBA could adopt one or more of the
[[Page 72602]]
following three actions: 1. To accept decreases in size standards as
suggested by the analytical 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, SBA estimates that about 11
of SBA's 7(a) and 504 loans with total amounts of $2.8 million could
not be made to those small businesses that would lose eligibility under
the reduced size standards (before mitigation). That represents about
0.3% decrease of the loan amounts compared to the baseline. Table 10,
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 the 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 the 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 10--Impacts of Decreases to Size Standards Under Alternative Option One
----------------------------------------------------------------------------------------------------------------
Sector 54 Sector 55 Sector 56 Total
----------------------------------------------------------------------------------------------------------------
No. of industries for which SBA considered 18 0 24 42
decreasing size standards (2012 Economic
Census)........................................
Total current small businesses in industries for 276,751 0 125,106 401,857
which SBA considered decreasing size standards
(EC 2012)......................................
Estimated no. of firms losing small status for 676 0 375 1,051
which SBA considered decreasing size standards
(2012 Economic Census).........................
% of Firms losing small status relative to 0.2% 0 0.3% 0.3%
current small businesses in industries for
which SBA considered decreasing size standards.
No. of current unique small firms getting small 10,016 0 8,885 18,280
business contracts in industries for which SBA
considered decreasing size standards (FPDS-NG
FY 2016-2018) \1\..............................
Estimated number of small business firms that 291 0 145 397
would have lost small business status in the
decreases that SBA considered..................
% decrease to small business firms relative to 2.9% 0 1.6% 2.2%
current unique small firms getting small
business contracts in industries for which SBA
considered decreasing size standards (FPDS-NG
FY 2016-2018) \1\..............................
Total small business contract dollars under $17,914.2 0 $6,847.8 $24,762.0
current size standards in industries for which
SBA considered decreasing size standards ($
million) (FPDS-NG FY 2016-2018)................
Estimated small business dollars not available $824.7 0 $201.8 $1,026.6
to firms losing small business status (Using
avg dollars obligated to SBs) ($ million) \ 2\
(FPDS-NG FY 2016-2018).........................
% decrease to small business dollars relative to 4.6% 0 2.9% 4.1%
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 to small 2,519 0 1,230 3,749
businesses in industries for which SBA
considered decreasing size standards (FY 2016-
2018)..........................................
Total amount of 7(a) and 504 loans to small $617.4 0 $335.2 $952.6
businesses in industries for which SBA
considered decreasing size standards ($
million) (FY 2016-2018)........................
Estimated no. of 7(a) and 504 loans not -7 0 -4 -11
available to firms that would have lost small
business status................................
Estimated 7(a) and 504 loan amount not available -$1.7 .............. -$1.1 -$2.8
to firms that would have lost small status ($
million).......................................
% decrease to 7(a) and 504 loan amount relative -0.3% 0 -0.3% -0.3%
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 businesses in 151 0 71 222
industries for which SBA considered decreasing
size standards (FY 2016-2018)..................
Total amount of EIDL loans to small businesses $7.4 0 $4.8 $12.3
in industries for which SBA considered
decreasing size standards ($ million) (FY 2016-
2018)..........................................
[[Page 72603]]
Estimated no. of EIDL loans not available to -1 0 -1 -2
firms that would have lost small business
status.........................................
Estimated EIDL loan amount not available to -$0.05 0 -$0.07 -$0.12
firms that would have lost small business
status ($ million).............................
% decrease to EIDL loan amount relative to the -0.7% 0 -1.4% -1.0%
baseline.......................................
----------------------------------------------------------------------------------------------------------------
\1\ 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.
\2\ Additional dollars are calculated multiplying average small business dollars obligated per DUNS times change
in number of firms.
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 the 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 on an unrestricted basis. As a result, large businesses may
have more Federal contracting opportunities. However, because agencies
are still required by law to award 23% 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 9 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 size standards were already shown in Table 9 above.
Table 10 (above) and Table 11, 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 88
industries in NAICS Sectors 54, 55, and 56 for which the analytical
results suggested to change size standards, about 1,530 firms (see
Table 11, below), would become small under the Option One. That
represents about 0.1% 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 67 active firms in Federal contracting in those industries
would lose small business status under Alternative Option One, most of
them from Sector 56. This represents a decrease of about 0.2% 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 $274.0 million of Federal procurement dollars would not be
available to firms losing their small status. This represents a
decrease of 0.6% from the Group's baseline. A large amount of the
losses are accounted for by Sector 54.
Based on the SBA's loan data for fiscal years 2016-2018, the total
number of 7(a) and 504 loans may increase by about 15 loans, and the
loan amounts by about $7.8 million. This represents a 0.3% increase 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 the total number
of EIDL loans may increase by about 1 loan, and the loan amount by
about $.03 million. This represents a 0.1% increase of the loan amounts
relative to the Group baseline. Table 11, below, provides these results
by NAICS sector.
Table 11--Net Impacts of Size Standards Changes Under Alternative Option One
----------------------------------------------------------------------------------------------------------------
Sector 54 Sector 55 Sector 56 Total
----------------------------------------------------------------------------------------------------------------
No. of industries with proposed changes to size 45 2 41 88
standards......................................
Total no. of small business under the current 739,641 4,926 301,609 1,046,177
size standards (2012 Economic Census)..........
Additional firms qualifying as small under 670 527 334 1,531
proposed size standards (2012 Economic Census).
% of additional firms qualifying as small 0.1% 10.7% 0.1% 0.1%
relative to total current small businesses.....
No. of current unique small firms getting small 20,601 1 12,384 31,395
business contracts (FPDS-NG FY 2016-2018) \1\..
[[Page 72604]]
Additional small firms getting small business 48 0 -75 -67
status (FPDS-NG FY 2016-2018)..................
% increase to small firms relative to current 0.2% 0.0% -0.6% -0.2%
unique small firms getting small business
contracts (FPDS-NG FY 2016-2018) \1\...........
Total small business small business contract 34,096.4 0.0 9,700 43,795
dollars under current size standards ($
million) (FPDS-NG FY 2016-2018)................
Estimated small business dollars available to -173.3 0 -101 -274.0
newly-qualified small firms ($ million) FPDS-NG
FY 2016-2018) \2\..............................
% increase to dollars relative to total small -0.5% 0.0% -1.0% -0.6%
business contract dollars under current size
standards......................................
Total no. of 7(a) and 504 loans to small 6,415 64 3,185 9,664
businesses (FY 2016-2018)......................
Total amount of 7(a) and 504 loans to small $2,056.8 $41.9 $796.0 $2,894.7
businesses (FY 2016-2018)......................
Estimated no. of additional 7(a) and 504 loans 5 7 3 15
to newly-qualified small firms.................
Estimated additional 7(a) and 504 loan amount to $2.7 $4.6 $0.5 $7.8
newly-qualified small firms ($ million)........
% increase to 7(a) and 504 loan amount relative 0.1% 10.9% 0.1% 0.3%
to the total amount of 7(a) and 504 loans to
small businesses...............................
Total no. of EIDL loans to small businesses (FY 406 1 178 585
2016-2018).....................................
Total amount of EIDL loans to small businesses $25.2 $0.0 $11.0 $36.2
(FY 2016-2018).................................
Estimated no. of additional EIDL loans to newly- 0 1 0 1
qualified small firms..........................
Estimated additional EIDL loan amount to newly- $0.02 $0.02 -$0.01 $0.03
qualified small firms ($ million)..............
% increase to EIDL loan amount relative to the 0.1% 100.0% -0.12% 0.1%
total amount of EIDL loans to small businesses.
----------------------------------------------------------------------------------------------------------------
\1\ 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.
\2\ Additional dollars are calculated multiplying average small business dollars obligated per DUNS times change
in number of firms.
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 46 size
standards and retaining 48 with this alternative approach, the benefits
for small businesses of adopting the proposal will not be attained, so
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 proposed 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 proposed rule may affect
small businesses seeking 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 is 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.
[[Page 72605]]
2. What is 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 1.05 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 1,530 businesses will be defined as 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. Changes in small
business size standards do not result in additional 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 that 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 46 size standards and maintain 48 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 46 industries for which the analytical results
suggest raising size standards would be raised. However, the size
standards of 42 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, particularly in sectors 54 and 56 (please see table 10). 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 46 size standards
and decreasing 42. Retaining all size standards at their current levels
would be more onerous for small businesses than the option of adopting
46 increases and retaining the rest of the size standards.
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 5 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 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 proposed rule
[[Page 72606]]
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 by:
0
a. Revising the heading to Sector 56.
0
b. Revising entries ``541110,'' ``541191,'' ``541199,'' ``541211,''
``541214,'' ``541310,'' ``541330,'' ``541350,'' ``541360,'' ``541420,''
``541490,'' ``541513,'' ``541611,'' ``541612,'' ``541614,'' ``541720,''
``541810,'' ``541830,'' ``541840,'' ``541850,'' ``541860,'' ``541870,''
``541910,'' ``541921,'' ``541930,'' ``541940,'' ``541990,'' ``551111,''
``551112,'' ``561110,'' ``561330,'' ``561422,'' ``561439,'' ``561440,''
``561450,'' ``561499,'' ``561599,'' ``561612,'' ``561613,'' ``561710,''
``561730,'' ``561740,'' ``561910,'' ``561920,'' ``561990,'' and
``562998'' to read as follows:
Sec. 121.201 What size standards has SBA identified by North American
Industry Classification System codes?
* * * * *
Small Business Size Standards by NAICS Industry
----------------------------------------------------------------------------------------------------------------
Size standards Size standards
NAICS codes NAICS U.S. industry title in millions of in number of
dollars employees
----------------------------------------------------------------------------------------------------------------
* * * * * * *
----------------------------------------------------------------------------------------------------------------
Sector 54--Professional, Scientific and Technical Services
Subsector 541--Professional, Scientific and Technical Services
----------------------------------------------------------------------------------------------------------------
541110...................................... Offices of Lawyers............ $13.5 ................
541191...................................... Title Abstract and Settlement 17.0 ................
Offices.
541199...................................... All Other Legal Services...... 18.0 ................
541211...................................... Offices of Certified Public 23.5 ................
Accountants.
* * * * * * *
541214...................................... Payroll Services.............. 34.5 ................
* * * * * * *
541310...................................... Architectural Services........ 11.0 ................
* * * * * * *
541330...................................... Engineering Services.......... 22.5 ................
* * * * * * *
541350...................................... Building Inspection Services.. 10.0 ................
541360...................................... Geophysical Surveying and 25.0 ................
Mapping Services.
* * * * * * *
541420...................................... Industrial Design Services.... 15.0 ................
* * * * * * *
541490...................................... Other Specialized Design 12.0 ................
Services.
* * * * * * *
541513...................................... Computer Facilities Management 32.5 ................
Services.
* * * * * * *
541611...................................... Administrative Management and 21.5 ................
General Management Consulting
Services.
541612...................................... Human Resources Consulting 25.5 ................
Services.
* * * * * * *
541614...................................... Process, Physical 17.5 ................
Distribution, and Logistics
Consulting Services.
* * * * * * *
541720...................................... Research and Development in 24.5 ................
the Social Sciences and
Humanities.
541810...................................... Advertising Agencies \10\..... \10\ 22.5 ................
* * * * * * *
541830...................................... Media Buying Agencies......... 28.5 ................
541840...................................... Media Representatives......... 18.5 ................
541850...................................... Outdoor Advertising........... 30.5 ................
541860...................................... Direct Mail Advertising....... 19.5 ................
541870...................................... Advertising Material 25.0 ................
Distribution Services.
[[Page 72607]]
* * * * * * *
541910...................................... Marketing Research and Public 20.0 ................
Opinion Polling.
541921...................................... Photography Studios, Portrait. 14.0 ................
* * * * * * *
541930...................................... Translation and Interpretation 20.0 ................
Services.
541940...................................... Veterinary Services........... 9.0 ................
541990...................................... All Other Professional, 17.0 ................
Scientific and Technical
Services.
----------------------------------------------------------------------------------------------------------------
Sector 55--Management of Companies and Enterprises
Subsector 551--Management of Companies and Enterprises
----------------------------------------------------------------------------------------------------------------
551111...................................... Offices of Bank Holding 34.0 ................
Companies.
551112...................................... Offices of Other Holding 40.0 ................
Companies.
----------------------------------------------------------------------------------------------------------------
Sector 56--Administrative and Support and Waste Management and Remediation Services
Subsector 561--Administrative and Support Services
----------------------------------------------------------------------------------------------------------------
561110...................................... Office Administrative Services 11.0 ................
* * * * * * *
561330...................................... Professional Employer 36.5 ................
Organizations.
* * * * * * *
561422...................................... Telemarketing Bureaus and 22.5 ................
Other Contact Centers.
* * * * * * *
561439...................................... Other Business Service Centers 23.5 ................
(including Copy Shops).
561440...................................... Collection Agencies........... 17.0 ................
561450...................................... Credit Bureaus................ 36.0 ................
* * * * * * *
561499...................................... All Other Business Support 19.0 ................
Services.
* * * * * * *
561599...................................... All Other Travel Arrangement 28.5 ................
and Reservation Services.
* * * * * * *
561612...................................... Security Guards and Patrol 25.5 ................
Services.
561613...................................... Armored Car Services.......... 38.0 ................
* * * * * * *
561710...................................... Exterminating and Pest Control 15.5 ................
Services.
* * * * * * *
561730...................................... Landscaping Services.......... 8.5 ................
561740...................................... Carpet and Upholstery Cleaning 7.5 ................
Services.
* * * * * * *
561910...................................... Packaging and Labeling 17.0 ................
Services.
561920...................................... Convention and Trade Show \10\ 17.5 ................
Organizers \10\.
561990...................................... All Other Support Services.... 14.5 ................
----------------------------------------------------------------------------------------------------------------
Subsector 562--Waste Management and Remediation Services
----------------------------------------------------------------------------------------------------------------
* * * * * * *
562998...................................... All Other Miscellaneous Waste 14.5 ................
Management Services.
* * * * * * *
----------------------------------------------------------------------------------------------------------------
Footnotes
* * * * * * *
\10\ NAICS codes 488510 (excluding the exception), 531210, 541810, 561510, 561520 and 561920--As measured by
total revenues, but excluding funds received in trust for an unaffiliated third party, such as bookings or
sales subject to commissions. The commissions received are included as revenue.
* * * * * * *
[[Page 72608]]
Jovita Carranza,
Administrator.
[FR Doc. 2020-24903 Filed 11-12-20; 8:45 am]
BILLING CODE 8026-03-P