[Federal Register Volume 87, Number 62 (Thursday, March 31, 2022)]
[Rules and Regulations]
[Pages 18607-18627]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-06604]


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SMALL BUSINESS ADMINISTRATION

13 CFR Part 121

RIN 3245-AG89


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

AGENCY: U.S. Small Business Administration.

ACTION: Final rule.

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SUMMARY: The U.S. Small Business Administration (SBA) is increasing its 
receipts-based small business size definitions (commonly referred to as 
``size standards'') for North American Industry Classification System 
(NAICS) Sectors related to Agriculture, Forestry, Fishing and Hunting; 
Mining, Quarrying, and Oil and Gas Extraction; Utilities; and 
Construction. Specifically, SBA is increasing size standards for 68 
industries in those sectors, including 58 industries and two 
subindustries (``exceptions'') in NAICS Sector 11 (Agriculture, 
Forestry, Fishing and Hunting), three industries in Sector 21 
(Quarrying, and Oil and Gas Extraction), three industries in Sector 22 
(Utilities), and one industry and one subindustry (``exception'') in 
Sector 23 (Construction).

DATES: This rule is effective May 2, 2022.

FOR FURTHER INFORMATION CONTACT: Samuel Castilla, 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 (CDC/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 five years and 
make necessary adjustments to reflect current industry and market 
conditions. In accordance with the Jobs Act, in early 2016, SBA 
completed the first five-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.
    Section 1831 of the National Defense Authorization Act for Fiscal 
Year 2017 (``NDAA 2017''), Public Law 114-328 (December 23, 2016) 
directed SBA to establish size standards for all agricultural 
enterprises in the same manner as for other industries and to include 
them in the five-year rolling review procedures established under 
section 1344(a) of the Jobs Act. Accordingly, in this final rule, SBA 
has evaluated the size standards for all agricultural industries, 
including 46 industries that are being reviewed for the first time. As 
stated above, historically, the size standards for most agricultural 
industries were established by statute.
    In addition to the comprehensive review of size standards, SBA also 
adjusts its monetary-based size standards for inflation at least once 
every five years. An interim final rule on SBA's latest inflation 
adjustment to size standards, effective August 19, 2019, was published 
in the Federal Register on July 18, 2019 (84 FR 34261). SBA also 
updates its size standards every five years to adopt the Office of 
Management and Budget's (OMB) quinquennial North American Industry 
Classification System (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)).\1\
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    \1\ On December 21, 2021, the U.S. Office of Management and 
Budget (OMB) published its ``Notice of NAICS 2022 Final Decisions . 
. .'' (86 FR 72277), accepting the Economic Classification Policy 
Committee (ECPC) recommendations, as outlined in the July 2, 2021, 
Federal Register notice (86 FR 35350), for the 2022 revisions to the 
North American Industry Classification System (NAICS), . . . .'' In 
the near future, SBA will issue a proposed rule to adopt the OMB 
NAICS 2022 revisions for its table of size standards. SBA 
anticipates updating its size standards with the NAICS 2022 
revisions, effective October 1, 2022.
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    This final rule is one of a series of final rules that will revise 
size standards of industries grouped by various NAICS sectors. Rather 
than revise all size standards at one time, SBA is revising size 
standards by grouping industries within various NAICS sectors that use 
the same size measure (i.e., employees or receipts). In the prior 
review, SBA revised size standards mostly on a sector-by-sector basis. 
As part of second five-year review of size standards under the Jobs 
Act, SBA reviewed all receipt-based size standards in NAICS Sectors 11, 
21, 22, and 23 to determine whether the existing size standards should 
be retained or revised based on the current industry and Federal market 
data. After its review, SBA published a proposed rule in the October 2, 
2020 issue of the Federal Register (85 FR 62239) which proposed to 
increase the size standards for 68 industries in the above sectors, 
including 58 industries and two

[[Page 18608]]

subindustries (``exceptions'') in NAICS Sector 11 (Agriculture, 
Forestry, Fishing and Hunting), three industries in Sector 21 
(Quarrying, and Oil and Gas Extraction), three industries in Sector 22 
(Utilities), and one industry and one subindustry (``exception'') in 
Sector 23 (Construction). In this final rule, SBA is adopting the 
proposed size standards from the October 2020 proposed rule without 
change, except for a further increase to the size standard for the 
Forest Fire Suppression and Fuel Management Services exceptions to 
NAICS 115310 based on public comments and the latest available data. 
For these exceptions, SBA is adopting a higher size standard of $30 
million instead of the proposed $25 million.
    In conjunction with the current comprehensive size standards 
review, SBA developed a revised ``Size Standards Methodology'' 
(Methodology) for developing, reviewing, and modifying size standards, 
when necessary. SBA's revised Methodology provides a detailed 
description of its analyses of various industry and program factors and 
data sources, and how the agency uses the results to establish and 
revise size standards. In the proposed rule itself, SBA detailed how it 
applied its revised Methodology to review and modify where necessary, 
the existing size standards for industries covered in this final rule. 
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 (84 FR 14587) of the issuance of the final revised 
Methodology. SBA's Size Standard Methodology is available on its 
website at www.sba.gov/size.
    In evaluating an industry's size standard, SBA examines its 
characteristics (such as average firm size, startup costs and entry 
barriers, industry competition and distribution of firms by size) and 
the small business level and share of Federal contract dollars in that 
industry. SBA also examines the potential impact a size standard 
revision might have on its financial assistance programs, and whether a 
business concern under a revised size standard would be dominant in its 
industry. SBA analyzed the characteristics of each receipt-based 
industry in NAICS Sectors 11 (except industries under Subsectors 111 
and 112), 21, 22, and 23, mostly using a special tabulation obtained 
from the U.S. Bureau of the Census from its 2012 Economic Census (the 
latest available). The 2012 Economic Census special tabulation 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. To evaluate 
industries under Subsectors 111 and 112, SBA used the special 
tabulation of the 2012 Census of Agriculture obtained from the USDA's 
National Agricultural Statistics Service (NASS). To evaluate average 
asset size, SBA combines the sales to total assets ratios by industry, 
obtained from the Risk Management Association's (RMA) Annual eStatement 
Studies (http://www.rmahq.org/estatement-studies/) with the simple 
average receipts size by industry from the 2012 Economic Census 
tabulation to estimate the average assets size for each industry. SBA 
also evaluated the small business level and share of Federal contracts 
in each of the industries using data from the Federal Procurement Data 
System--Next Generation (FPDS-NG) for fiscal years 2016-2018. Table 4 
of the October 2020 proposed rule, 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 the proposed rule. Of the 100 
industries and three subindustries (exceptions) reviewed in the 
proposed rule, the results from analyses of the latest available data 
on the five primary factors from Table 4 of the proposed rule supported 
increasing size standards for 65 industries and three subindustries, 
and decreasing size standards for 35 industries. Table 1, Summary of 
Calculated Size Standards, summarizes the analytical results from the 
proposed rule by NAICS sector.

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

    In the October 2020 proposed rule, SBA discussed the impacts of the 
COVID-19 pandemic on small businesses and greater society. Recognizing 
the wide-ranging economic impacts of the pandemic, SBA decided not to 
lower any size standards for which the analysis suggested lowering 
them. Instead, SBA proposed to maintain all size standards for 
industries in which the analytical results supported a decrease or no 
change to size standards and adopt all size standards for which the 
analytical results supported an increase to size standards. To evaluate 
the impact of the changes to size standards adopted in this final rule 
on the Federal contracting market and SBA's loan programs, SBA analyzed 
FPDS-NG data for fiscal years 2018-2020 and internal data on its 
guaranteed loan programs for fiscal years 2018-2020. The results of 
this analysis can be found in the Regulatory Impact Analysis section of 
this final rule.
    In the proposed rule, SBA sought comments on its proposal to 
increase size standards for 68 industries and subindustries and retain 
the current size standards for the remaining 35 industries in NAICS 
Sectors 11, 21, 22 and 23. Specifically, SBA requested comments on 
whether the proposed revisions are appropriate for the industries 
covered by the proposed rule, whether the decision not to lower any 
size standards is justified by the COVID-19 pandemic, whether the equal

[[Page 18609]]

weighting of individual factors to derive an industry size standard is 
appropriate, and whether the data sources used were appropriate or 
sufficient.

Discussion of Comments

    SBA received a total of 1,021 comments to the proposed rule from a 
wide range of entities, including individuals, businesses, 
organizations, and trade associations. Of the 1,021 comments received, 
1,013 comments pertained to Sector 11--including 942 comments that 
pertained to the animal production industries and 71 comments that 
pertained to the Agricultural (Sector 11) industry generally. SBA also 
received three comments on NAICS 115310 (Support Activities for 
Forestry) and its two exceptions, and one comment each on NAICS codes 
237990 (the dredging exception), 236220 and NAICS Sector 23. SBA 
received one comment that was not relevant to the proposed rule and 1 
comment that voiced a general objection to the proposed rule without 
providing any rationale. The comments to the proposed rule are 
available at www.regulations.gov (RIN 3245-AG89) and are summarized and 
discussed below.

Comments on Proposed Changes to Sector 11--Agriculture, Forestry, 
Fishing and Hunting

    SBA received a total of 1,013 comments to its proposed changes to 
size standards for industries in Sector 11. Of the 1,013 comments 
received, 942 comments, many of which were nearly identical, objected 
to the proposed rule on the grounds that it would result in Federal 
funding for corporate animal agribusiness, including concentrated 
animal feeding operations (CAFOs). These commenters stated that the 
increase of certain agricultural size standards would result in large 
corporate agricultural concerns with potentially abusive animal 
practices qualifying as small for SBA's financial assistance programs. 
Most of these commenters did not identify a particular NAICS code or 
set of NAICS codes, but the SBA assumes they most likely referred to 
NAICS codes 112111 through 112519, which correspond to the animal 
production industries. The remaining 71 comments objected to the 
proposed changes to the size standards on the grounds that it would 
unfairly benefit larger businesses and farms. These comments emphasized 
the historical consolidation in the agricultural sector as well as 
larger farms receiving the majority of Federal assistance and 
subsidies. One commenter also cited the difficulty for smaller farms to 
enter the market and the prevalence of vertical integration for 
concentrated animal feeding operations (CAFOs) as reasons not to raise 
agricultural size standards.
SBA Response
    SBA disagrees with commenters that the proposed regulations will 
allow a significant number of large firms to qualify as small in the 
animal production industries, namely NAICS codes 112111, 112112, 
112120, 112310, 112320, 112330, 112340, 112390, 112410, 112420, 112511, 
112512 and 112519. Based on data from the 2012 Agricultural Census, SBA 
determined that if the proposed size standards were adopted, the number 
of small firms in these industries would increase from 801,603 to 
821,632, an increase of 20,029 firms or 2.5%. The percentage of small 
firms in these industries would increase from 96.5% under current size 
standards to 98.9% under the proposed size standards. SBA also analyzed 
its internal data on 7(a) and 504 loans to determine the impact of 
increases to size standards on SBA's financial assistance programs for 
these industries.
    As discussed in the proposed rule, the majority of the animal 
production industries previously had a $750,000 receipts-based size 
standard, which was established directly by Congress in section 806 of 
the Small Business Reauthorization Act of 2000, Appendix I, Public Law 
106-554, 114 Stat. 2763, (December 21, 2000). In 2016, Congress passed 
NDAA 2017, directing SBA to establish size standards for these 
industries in the same manner that the agency establishes the size 
standards for other industries and to include them in the five-year 
rolling review under the Jobs Act. Effective August 19, 2019, SBA 
raised the $750,000 receipts-based size standard for these industries 
to $1 million in an interim final rule, adjusting all monetary size 
standards for inflation (84 FR 34261 (July 18, 2019)).
    Based on the data for fiscal years 2019-2020, the time period when 
the higher $1 million size standard was effective, SBA did not see any 
increase to the total number of firms receiving loans in the animal 
production industries identified above. Recognizing that firms may have 
qualified for SBA's financial assistance programs under the tangible 
net worth and net income based alternative size standard, and thus, may 
have exceeded the industry size standard, SBA also analyzed the 
distribution of loans by revenue and determined that there was not an 
increase in the number of loans to firms with revenues between $0.75 
million and $1 million during fiscal years 2019-2020. SBA found that 
the average firm size of businesses receiving loans was much smaller 
than the current $1 million industry size standard, indicating that 
larger small firms are not the primary beneficiaries of SBA's financial 
assistance programs.
    Generally, the majority of loans guaranteed by SBA through its 7(a) 
and CDC/504 loan programs are disbursed to firms that are much smaller 
than the industry size standard, in part due to the SBA's ``credit 
elsewhere'' test (13 CFR 120.101). This test requires lenders to 
certify that an applicant to the SBA's loan program is unable to obtain 
a loan on reasonable terms without a Federal Government guaranty, and 
that some or all of the loan is not available from the resources of the 
applicant business or the personal resources of the principals of the 
applicant business. SBA's proposed changes to size standards do not 
impact this requirement; thus, smaller small firms are more likely to 
remain the primary beneficiaries of SBA's financial assistance programs 
as firms at the margin of SBA's industry size standards are more likely 
to be able to obtain credit elsewhere.
    For the above reasons, SBA does not anticipate that a 2.5% increase 
to the total number of small firms in the animal production industries 
will unfairly favor larger small firms in those industries, 
particularly those that may be classified as CAFOs, to the detriment of 
smaller small firms in accessing SBA's financial assistance. Therefore, 
SBA is adopting the size standards for the animal production industries 
identified above, as proposed.

Comments on Proposed Changes to NAICS 115310--Support Activities for 
Forestry and Its Forest Fire Suppression and Fuel Management Services 
Exceptions

    SBA received three comments generally supporting the proposed 
increase to the size standard for NAICS 115310 and its two exceptions. 
SBA proposed to increase the size standard for the overall NAICS 115310 
(Support Activities for Forestry) from $8 million to $10 million and 
the size standard for the Forest Fire Suppression and Fuel Management 
Services exceptions to that NAICS code from $20.5 million to $25 
million. These comments listed a number of factors in support of the 
proposed increases, including increased costs, increased size of 
Federal contracts, increased length, frequency and severity of 
wildfires, and Government's encouragement to use wood biproducts to 
generate further receipts. The commenters stressed that if the size 
standard is not raised, they would be forced to cut back on growth

[[Page 18610]]

to stay small and possibly lay off employees. Two of these commenters 
petitioned SBA to raise the size standard for the two exceptions to 
between $35 million and $41.5 million, with one commenter requesting 
that SBA immediately increase the size standard to at least $22 million 
until a final determination can be made.
SBA Response
    SBA agrees with commenters that a higher size standard better 
reflects the economic characteristics of the firms within NAICS 115310 
and its two exceptions. In the proposed rule, SBA's calculated size 
standard for the Forest Fire Suppression and Fuel Management Services 
exceptions was $23.5 million. However, in view of the inherent 
uncertainty of occurrences of forest fires and recent surges in forest 
fire incidents and extended fire seasons, SBA believes that contracting 
officers need to have better flexibility to be able to hire enough 
small businesses, especially in the worst-case scenario. In the 
proposed rule, SBA estimated that in a very busy fire season, it is not 
implausible to assume the length of fire season to be 120 days with 14 
hours work shifts of fire crews. Based on a review of the latest 
available data, SBA determined that the length of the average fire 
season has increased in recent years as well as the severity of fires 
in terms of total acreage burned. For example, based on data from the 
National Interagency Fire Center (https://www.nifc.gov/fire-information/statistics/wildfires), SBA determined that two of the three 
fire seasons with total acres burned above ten million have occurred in 
the past five years, and all of them within the past seven years. Based 
on recent data, SBA estimates that a very busy fire season could last 
as long as seven months. Assuming an average price of $43 dollars per 
person per hour, a total amount of about $9 million could be awarded to 
a firm with an average number of four crews (one crew comprises 20 
firefighters) during a longer, more severe fire season. In the case of 
the largest firms with 15-20 crews, the amount could reach up to $43 
million. Both figures include only payments to firefighters for direct 
fire suppression activities and do not cover additional payments, such 
as payments for fire engines, water tenders, etc. With the reality of a 
longer and more severe average fire season in mind, in the proposed 
rule, SBA proposed to increase the size standard for the Forest Fire 
Suppression and Fuels Management Services exceptions to $25 million, 
above the current size standard of $20.5 million and the calculated 
size standard of $23.5 million. However, in light of public comments 
and more recent data demonstrating the increasing severity and length 
of wildfires and the growing costs to suppress them, in this final 
rule, SBA is adopting a higher size standard of $30 million. In 
addition to the comprehensive review of size standards, SBA also 
adjusts its monetary-based size standards for inflation at least once 
every five years but may choose to adjust them more frequently if 
economic conditions warrant an increase during the five-year period.
    SBA reviewed the arguments and data provided by commenters 
requesting that SBA establish an even higher size standard for the 
Forest Fire Suppression and Fuel Management Services exceptions in the 
range of $35 million to $41.5 million. SBA believes that the arguments 
and data provided by commenters were not sufficient to support a size 
standard higher than $30 million because the economic characteristics 
of firms in this industry do not support a size standard near the SBA's 
maximum receipts-based size standard. Specifically, while two 
commenters maintained that increased operational costs, longer fire 
seasons and the almost exclusive use of set-asides by the Federal 
government in the industry exceptions have caused many firms to cut 
back on growth to stay small, SBA determined that only a very few firms 
providing services under the industry exceptions may face a scenario 
where they would need to downsize or reject work in order to remain 
small. The average firm size of firms participating in the Forest Fire 
Suppression and Fuel Management Services is $3.7 million, far below 
SBA's proposed size standard of $25 million and much lower than the 
adopted size standard of $30 million. Generally, SBA would expect to 
see a larger average firm size for the industry if a large number of 
firms were approaching the size standard and having to downsize or 
reject work in order to remain small.
    Based on SBA's analysis of the five primary factors for the Forest 
Fire Suppression and Fuel Management Services exceptions, provided in 
Table 4 of the October 2020 proposed rule, a size standard in the range 
of $35 million to $41.5 million recommended by the commenters would be 
supported by only one factor. Only the Gini coefficient factor 
supported a $41 million size standard for these exceptions. All other 
factors supported $23.5 million or less. SBA's decision to adopt a 
higher $30 million size standard was influenced by information 
submitted by three commenters, our communications with Forest Service 
officials, and review of updated information on firms involved in 
forest fire suppression. All these indicated that forest fire seasons 
have become longer and more severe and fire suppression (including 
wages to fire crews) and equipment costs have increased from the time 
when the $25 million size standard was proposed. Thus, SBA believes 
that a size standard of $30 million is appropriate for this industry 
and will benefit small businesses of all sizes as well as the Federal 
Government in terms of access to an expanded pool of small businesses 
to draw from for small business set-asides in case of unexpected surges 
in forest fires. The inherent uncertainty of occurrences of forest 
fires and recent surges in forest fire incidents and extended fire 
seasons and the contracting officers' need to have flexibility to be 
able to hire enough small businesses, especially in the worst case 
scenario, also supports a higher $30 million size standard. SBA 
believes that competition within the industry will improve as more set-
aside opportunities are created, and businesses have a longer runway to 
gain experience and compete with larger firms whose primary services 
are outside of NAICS 115310. Given the above reasons, SBA is adopting 
$10 million as the size standard for NAICS 115310 and $30 million as 
the size standard for Forest Fire Suppression and Fuel Management 
Services exceptions under that NAICS industry.

Comments on Proposed Changes to the Dredging and Surface Cleanup 
Activities Exception to NAICS 237990--Other Heavy and Civil Engineering 
Construction

    SBA received one comment expressing support for SBA's approach to 
calculating the size standard for the Dredging and Surface Cleanup 
Activities (Dredging) exception under NAICS 237990 (Other Heavy and 
Civil Engineering Construction). Specifically, the commenter supported 
the SBA's proposal to increase the size standard for Dredging from $30 
million to $32.5 million in average annual receipts. This comment also 
supported keeping the 40% equipment requirement for this exception as 
outlined in Footnote 2 under the SBA's Table of Size Standards, or 
perhaps even raising it to higher than 40%. The commenter expressed 
that any alternative to the equipment requirement found in footnote 2, 
such as basing the requirement on contract dollar value or the number 
of personnel involved, would not be as effective at preventing

[[Page 18611]]

large firms from accessing small business set-aside opportunities.
SBA Response
    SBA agrees with the commenter that SBA's proposed size standard 
better reflects the economic characteristics of the firms within the 
Dredging industry. SBA believes that the proposed size standard will 
benefit all small firms as a larger size standard extends the time that 
small firms can remain small and compete for larger Dredging contracts. 
As a result of this expanded runway, small firms will be able to 
acquire more experience and technical capabilities in order to compete 
with larger firms once they exceed the size standard. Moreover, with an 
expanded pool of small businesses, the Federal Government will have 
more qualified small businesses to choose from, and as a result, likely 
will set aside more contracts for all small businesses. SBA agrees with 
the commenter that the 40% equipment requirement for this exception as 
outlined in footnote 2 of the SBA's Table of Size Standards is 
appropriate. Given the expressed support for SBA's proposed increase to 
the size standard for the Dredging exception to NAICS 237990 and the 
absence of any significant adverse comments opposing the increase, SBA 
is adopting $32.5 million as the size standard for Dredging, as 
proposed.

Comments on Proposed Changes to NAICS 236220--Commercial and 
Institutional Building Construction

    SBA received one comment regarding SBA's proposal to maintain the 
size standard for NAICS 236220 (Commercial and Institutional Building 
Construction) at $39.5 million. The analytical results supported a 
lower $25.5 million size standard for NAICS 236220, but considering the 
impact of the COVID-19 pandemic and Government response, SBA proposed 
to retain the current $39.5 million size standard. The commenter argued 
that the size standard for NAICS 236220 should be increased to help 
small firms overcome the government's overly restrictive contracting 
practices in this industry which results in disadvantages to truly 
small firms. The commenter cited such practices as excessive and high 
threshold past performance requirements as well as a general rise in 
overall project size requirements. The commenter also emphasized that 
the COVID-19 pandemic has resulted in a contraction of the pool of 
small businesses able to contract with the government. The commenter 
believes that the result of these circumstances is that only mentor-
prot[eacute]g[eacute] firms will be able to qualify under these very 
restrictive contracting opportunities.
SBA Response
    In response to comments that the Federal government's contracting 
practices in NAICS 236220 disadvantage small firms and that the COVID-
19 pandemic has resulted in a contraction of the pool of small 
businesses able to contract with the Government SBA analyzed data from 
FPDS-NG during fiscal years 2018-2020 to evaluate the number and size 
of Federal contracting opportunities available to small firms. Based on 
an analysis of this data, SBA determined that there was an increase in 
dollars obligated to small businesses during fiscal years 2018-2020, 
which suggests that small firms have continued to do well in the 
Federal marketplace while providing valuable services to the Federal 
government during the COVID-19 related economic crisis. Table 2, 
Dollars Obligated to Small Businesses under NAICS 236220, shows the 
count of small business contracts under this NAICS code, the dollars 
obligated to small businesses, and the annual growth rate in small 
business dollars obligated during fiscal years 2018-2020.

                        Table 2--Dollars Obligated to Small Businesses Under NAICS 236220
----------------------------------------------------------------------------------------------------------------
                                                                                                   Annual growth
                                                                                      Dollars         rate in
                                                                  Count of small   obligated  to      dollars
                           Fiscal year                              businesses         small       obligated  to
                                                                     contracts     businesses ($       small
                                                                                     million)       businesses
----------------------------------------------------------------------------------------------------------------
2018............................................................          38,498        $9,444.9
2019............................................................          38,702         9,883.4            4.6%
2020............................................................          40,888        10,088.9            2.1%
----------------------------------------------------------------------------------------------------------------

    In the proposed rule, SBA used FPDS-NG data from fiscal years 2016-
2018 to evaluate small business participation in the Federal 
contracting market in terms of the share of total Federal contract 
dollars awarded to small businesses relative to the small business 
share of an industry's total receipts. In general, if the share of 
Federal contract dollars awarded to small businesses in an industry is 
significantly smaller than the small business share of the total 
industry's receipts, all else remaining the same, a justification would 
exist for considering a size standard higher than the current size 
standard. In cases where the 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. Regarding 
NAICS 236220 specifically, SBA calculated a Federal contracting factor 
of 9.4%, which indicates that the small business share of federal 
contracting dollars is higher than the small business share of industry 
receipts. Thus, the Federal contracting factor supports maintaining the 
size standard at the current $39.5 million level. Using the FPDS-NG 
data from fiscal years 2018-2020, SBA found that the small business 
share of federal contracting dollars is still higher than the share of 
industry receipts. As such, SBA disagrees with the commenter that the 
Federal government's contracting practices in this industry 
disadvantage small firms and that the COVID-19 pandemic has resulted in 
a contracted pool of small businesses able to contract with the 
government and is adopting $39.5 million as the size standard for NAICS 
236220, as proposed.

Comments on Proposed Changes to Sector 23--Construction

    SBA received one comment to the proposed rule that petitioned SBA 
to change the measure of size for construction industries from average 
annual receipts to full time equivalent (FTE) employees. This comment 
argued that receipts is a misleading measure of size for these 
industries due to increasing costs for materials, supplies, and labor.
SBA Response
    SBA disagrees that receipts-based standards do not properly reflect 
the size of companies in the construction industry. SBA believes that 
receipts, which represent the value of a

[[Page 18612]]

company's entire portfolio of completed work in a given period of time, 
is a better measure of the size of a construction company to determine 
its eligibility for Federal contracts set aside for small businesses 
than the number of employees. Moreover, under SBA's prime contractor 
performance requirements (see 13 CFR 125.6, limitations on 
subcontracting), a general construction company must perform as little 
as 15% of value of work with its own resources, and a specialty trade 
contractor may perform as little as 25% of work with its own resources. 
SBA is concerned that employee-based size standards for construction 
industries could encourage a construction company near the size 
standard to subcontract more work to others to bypass the limitations 
on subcontracting and remain technically a small business. Regardless 
of the amount of work a company subcontracts, it is part of its annual 
revenue, because the company is responsible for the entire project. In 
other words, under a receipts-based size standard, the company is not 
allowed to deduct subcontracting costs from the average annual 
receipts-based calculation. Under the employee-based size standard, 
companies would not count their subcontractors' employees to calculate 
their total number of employees. A company that subcontracts a great 
deal can have a considerably fewer employees than one that performs 
more of its work in-house.
    Furthermore, in 2004, SBA proposed to replace annual receipts with 
number of employees as the basis for size standards for most 
industries, including construction (see 69 FR 11129 (March 19, 2004)). 
Commenters in the construction industry generally opposed SBA's 
proposal for a number of reasons, such as those SBA provides above. In 
addition, because employee-based size standards represent the average 
number of employees per pay period for the firm's immediately preceding 
12 calendar months, businesses would have to recalculate their size on 
a monthly basis. Receipts, on the other hand, are calculated over the 
last five fiscal years for all SBA's programs, except for the loan 
programs for which receipts are calculated over the last three years. 
This allows for changes in the construction industry as well as 
fluctuations in sales due to economic conditions.
    Employment data by industry from Economic Census and County 
Business Patterns and Federal statistical agencies (such Bureaus of 
Economic Analysis and Labor Statistics) that SBA uses in its size 
standards analysis are based on total head counts of part-time, 
temporary, and full-time employees, not based on FTEs. In other words, 
part-time employees are counted the same as full-time employees. In 
addition, using FTEs as a basis of size measure may increase reporting 
and record keeping requirements for small businesses to qualify for 
Federal programs. For the reasons outlined above, in this final rule, 
SBA is not adopting employee-based size standards for the construction 
sector.

Summary of Adopted Revisions to Size Standards

    Based on the evaluation of public comments it received on the 
proposed rule and given the expressed support for SBA's proposed 
increases and the absence of any significant adverse comments opposing 
the proposed increases, SBA is adopting the size standards as proposed 
in the October 2020 proposed rule, except for the Forest Fire 
Suppression and Fuel Management exceptions under NAICS 115310. For 
these exceptions, SBA is adopting a higher size standard of $30.0 
million based on public comments and evaluation of newly available 
information regarding the industry and firms participating in the fire 
suppression and related activities. Thus, SBA is increasing size 
standards for 68 industries in NAICS sectors 11, 21, 22, and 23. This 
includes 58 industries and two subindustries (``exceptions'') in NAICS 
Sector 11 (Agriculture, Forestry, Fishing and Hunting), three 
industries in Sector 21 (Quarrying, and Oil and Gas Extraction), three 
industries in Sector 22 (Utilities), and one industry and one 
subindustry (``exception'') in Sector 23 (Construction). A summary of 
SBA's size standards revisions in this rule can be found below in Table 
3, Summary of Size Standards Revisions in NAICS Sectors 11, 21, 22, and 
23.

                Table 3--Summary of Size Standards Revisions in NAICS Sectors 11, 21, 22, and 23
----------------------------------------------------------------------------------------------------------------
                                                                   Current size     Calculated     Adopted size
              NAICS code                   NAICS U.S. industry      standard ($    size standard    standard ($
                                                  title              million)       ($ million)      million)
----------------------------------------------------------------------------------------------------------------
111110................................  Soybean Farming.........            $1.0            $2.0            $2.0
111120................................  Oilseed (except Soybean)             1.0             2.0             2.0
                                         Farming.
111130................................  Dry Pea and Bean Farming             1.0             2.5             2.5
111140................................  Wheat Farming...........             1.0             2.0             2.0
111150................................  Corn Farming............             1.0            2.25            2.25
111160................................  Rice Farming............             1.0            2.25            2.25
111191................................  Oilseed and Grain                    1.0             2.0             2.0
                                         Combination Farming.
111199................................  All Other Grain Farming.             1.0             2.0             2.0
111211................................  Potato Farming..........             1.0            3.75            3.75
111219................................  Other Vegetable (except              1.0            3.25            3.25
                                         Potato) and Melon
                                         Farming.
111310................................  Orange Groves...........             1.0             3.5             3.5
111320................................  Citrus (except Orange)               1.0            3.75            3.75
                                         Groves.
111331................................  Apple Orchards..........             1.0             4.0             4.0
111332................................  Grape Vineyards.........             1.0             3.5             3.5
111333................................  Strawberry Farming......             1.0            4.75            4.75
111334................................  Berry (except                        1.0            3.25            3.25
                                         Strawberry) Farming.
111335................................  Tree Nut Farming........             1.0            3.25            3.25
111336................................  Fruit and Tree Nut                   1.0             4.5             4.5
                                         Combination Farming.
111339................................  Other Noncitrus Fruit                1.0             3.0             3.0
                                         Farming.
111411................................  Mushroom Production.....             1.0             4.0             4.0
111419................................  Other Food Crops Grown               1.0             4.0             4.0
                                         Under Cover.
111421................................  Nursery and Tree                     1.0            2.75            2.75
                                         Production.
111422................................  Floriculture Production.             1.0            3.25            3.25
111910................................  Tobacco Farming.........             1.0            2.25            2.25
111920................................  Cotton Farming..........             1.0            2.75            2.75

[[Page 18613]]

 
111930................................  Sugarcane Farming.......             1.0             4.5             4.5
111940................................  Hay Farming.............             1.0            2.25            2.25
111991................................  Sugar Beet Farming......             1.0            2.25            2.25
111992................................  Peanut Farming..........             1.0            2.25            2.25
111998................................  All Other Miscellaneous              1.0            2.25            2.25
                                         Crop Farming.
112111................................  Beef Cattle Ranching and             1.0            2.25            2.25
                                         Farming.
112112................................  Cattle Feedlots.........             8.0            19.5            19.5
112120................................  Dairy Cattle and Milk                1.0            3.25            3.25
                                         Production.
112210................................  Hog and Pig Farming.....             1.0             3.5             3.5
112310................................  Chicken Egg Production..            16.5            15.5            16.5
112320................................  Broilers and Other Meat              1.0             3.0             3.0
                                         Type Chicken Production.
112330................................  Turkey Production.......             1.0            3.25            3.25
112340................................  Poultry Hatcheries......             1.0             3.5             3.5
112390................................  Other Poultry Production             1.0            3.25            3.25
112410................................  Sheep Farming...........             1.0             3.0             3.0
112420................................  Goat Farming............             1.0            2.25            2.25
112511................................  Finfish Farming and Fish             1.0            3.25            3.25
                                         Hatcheries.
112512................................  Shellfish Farming.......             1.0            3.25            3.25
112519................................  Other Aquaculture.......             1.0            3.25            3.25
112910................................  Apiculture..............             1.0            2.75            2.75
112920................................  Horses and Other Equine              1.0             2.5             2.5
                                         Production.
112930................................  Fur-Bearing Animal and               1.0            3.25            3.25
                                         Rabbit Production.
112990................................  All Other Animal                     1.0             2.5             2.5
                                         Production.
113110................................  Timber Tract Operations.            12.0            16.5            16.5
113210................................  Forest Nurseries and                12.0            18.0            18.0
                                         Gathering of Forest
                                         Products.
114111................................  Finfish Fishing.........            22.0            20.5            22.0
114112................................  Shellfish Fishing.......             6.0            12.5            12.5
114119................................  Other Marine Fishing....             8.0            10.0            10.0
114210................................  Hunting and Trapping....             6.0             7.5             7.5
115111................................  Cotton Ginning..........            12.0            14.0            14.0
115112................................  Soil Preparation,                    8.0             8.5             8.5
                                         Planting, and
                                         Cultivating.
115113................................  Crop Harvesting,                     8.0            12.0            12.0
                                         Primarily by Machine.
115114................................  Postharvest Crop                    30.0            27.5            30.0
                                         Activities (except
                                         Cotton Ginning).
115115................................  Farm Labor Contractors             16.50            12.5            16.5
                                         and Crew Leaders.
115116................................  Farm Management Services             8.0            13.5            13.5
115210................................  Support Activities for               8.0             9.5             9.5
                                         Animal Production.
115310................................  Support Activities for               8.0            10.0            10.0
                                         Forestry.
115310 (Exception 1)..................  Forest Fire Suppression             20.5            23.5            30.0
                                         Services.
115310 (Exception 2)..................  Fuels Management                    20.5            23.5            30.0
                                         Services.
213112................................  Support Activities for              41.5            38.0            41.5
                                         Oil and Gas Operations.
213113................................  Support Activities for              22.0            24.0            24.0
                                         Coal Mining.
213114................................  Support Activities for              22.0            36.0            36.0
                                         Metal Mining.
213115................................  Support Activities for               8.0            18.0            18.0
                                         Nonmetallic Minerals
                                         (except Fuels) Mining.
221310................................  Water Supply and                    30.0            36.0            36.0
                                         Irrigation Systems.
221320................................  Sewage Treatment                    22.0            31.0            31.0
                                         Facilities.
221330................................  Steam and Air-                      16.5            26.5            26.5
                                         Conditioning Supply.
236115................................  New Single-Family                   39.5             8.0            39.5
                                         Housing Construction
                                         (except For-Sale
                                         Builders).
236116................................  New Multifamily Housing             39.5            25.5            39.5
                                         Construction (except
                                         For-Sale Builders).
236117................................  New Housing For-Sale                39.5            27.5            39.5
                                         Builders.
236118................................  Residential Remodelers..            39.5            13.5            39.5
236210................................  Industrial Building                 39.5            29.0            39.5
                                         Construction.
236220................................  Commercial and                      39.5            25.5            39.5
                                         Institutional Building
                                         Construction.
237110................................  Water and Sewer Line and            39.5            20.0            39.5
                                         Related Structures
                                         Construction.
237120................................  Oil and Gas Pipeline and            39.5            33.0            39.5
                                         Related Structures
                                         Construction.
237130................................  Power and Communication             39.5            31.0            39.5
                                         Line and Related
                                         Structures Construction.
237210................................  Land Subdivision........            30.0            22.0            30.0
237310................................  Highway, Street, and                39.5            28.5            39.5
                                         Bridge Construction.
237990................................  Other Heavy and Civil               39.5            29.5            39.5
                                         Engineering
                                         Construction.
237990 (Exception)....................  Dredging and Surface                30.0            32.5            32.5
                                         Clean-Up Activities.
238110................................  Poured Concrete                     16.5            12.5            16.5
                                         Foundation and
                                         Structure Contractors.
238120................................  Structural Steel and                16.5            13.0            16.5
                                         Precast Concrete
                                         Contractors.
238130................................  Framing Contractors.....            16.5             8.5            16.5
238140................................  Masonry Contractors.....            16.5            10.5            16.5
238150................................  Glass and Glazing                   16.5             8.0            16.5
                                         Contractors.
238160................................  Roofing Contractors.....            16.5            10.0            16.5
238170................................  Siding Contractors......            16.5             7.0            16.5

[[Page 18614]]

 
238190................................  Other Foundation,                   16.5            13.0            16.5
                                         Structure, and Building
                                         Exterior Contractors.
238210................................  Electrical Contractors              16.5            13.5            16.5
                                         and Other Wiring
                                         Installation
                                         Contractors.
238220................................  Plumbing, Heating, and              16.5            12.0            16.5
                                         Air-Conditioning
                                         Contractors.
238290................................  Other Building Equipment            16.5            19.5            19.5
                                         Contractors.
238310................................  Drywall and Insulation              16.5            11.5            16.5
                                         Contractors.
238320................................  Painting and Wall                   16.5            10.0            16.5
                                         Covering Contractors.
238330................................  Flooring Contractors....            16.5            10.5            16.5
238340................................  Tile and Terrazzo                   16.5             7.5            16.5
                                         Contractors.
238350................................  Finish Carpentry                    16.5             7.5            16.5
                                         Contractors.
238390................................  Other Building Finishing            16.5            11.0            16.5
                                         Contractors.
238910................................  Site Preparation                    16.5            12.0            16.5
                                         Contractors.
238990................................  All Other Specialty                 16.5            11.5            16.5
                                         Trade Contractors.
----------------------------------------------------------------------------------------------------------------

    Table 4, Summary of Adopted Size Standards Revisions by Sector, 
below, summarizes the adopted changes to size standards by NAICS 
sector.

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

Evaluation of Dominance in Field of Operation

    SBA determined that for the industries evaluated under this final 
rule, no individual firm at or below the adopted size standards would 
be large enough to dominate its field of operation. At the size 
standard levels adopted in this final rule, the small business share of 
total industry receipts among those industries would be, on average, 
0.63%, varying from 0.003% to 22.3%. These market shares effectively 
preclude a firm at or below the adopted size standards from exerting 
control on any of the industries.

Alternatives Considered

    In response to the unprecedented economic impacts of the COVID-19 
pandemic on small businesses and Government response, SBA is adopting 
increases to size standards where the data suggests increases are 
warranted and retaining all current size standards where the data 
suggested lowering is appropriate. SBA is also retaining all current 
size standards where the data suggested no changes to the current 
standards.
    Nonetheless, SBA considered two other alternatives. Alternative 
Option One was to adopt changes to size standards exactly as suggested 
by the analytical results. In other words, Alternative Option One would 
entail increasing size standards for 68 industries and subindustries 
and decreasing them for 35 industries. Alternative Option Two was to 
retain all current size standards.
    SBA did not adopt Alternative Option One because it 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. Lowering size standards in 
the current environment would run counter to various measures the 
Federal Government has implemented to help U.S. small businesses and 
the overall economy recover from the ongoing COVID-19 pandemic. 
Considering the impacts of the Great Recession and Government actions 
that followed to support small businesses and the overall economy, SBA 
also adopted a similar policy of not decreasing size standards during 
the first five-year review of size standards, even though the data 
suggested decreases.
    Under Alternative Option Two, given the current COVID-19 pandemic, 
SBA considered retaining the current level of all size standards even 
though the analytical results suggested changing them. 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 Alternative Option Two either because the results discussed in 
the Regulatory Impact Analysis section, below, show that retaining all 
size standards at their current levels would cause otherwise qualified 
small businesses to forgo various small business benefits becoming 
available to them under the option of increasing 68 and retaining 35 
size standards adopted in this final rule. Such benefits would include 
access to Federal contracts set aside for small businesses and capital 
through SBA's loan and SBIC programs, and exemptions from paperwork and 
other compliance requirements.

[[Page 18615]]

Compliance With Executive Orders 12866, the Congressional Review Act (5 
U.S.C. 801-808), 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 
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 final rule, including: (1) A statement of the 
need for the action, (2) An examination of alternative approaches, and 
(3) An evaluation of the benefits and costs--both quantitative and 
qualitative--of the action and the alternatives considered.

Regulatory Impact Analysis

    1. What is a need for this regulatory action?
    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.
    Under the Small Business Act (Act) (15 U.S.C. 632(a)), SBA's 
Administrator is responsible for establishing small business size 
definitions (or ``size standards'') and ensuring that such definitions 
vary from industry to industry to reflect differences among various 
industries. The Jobs Act requires SBA to review every five years all 
size standards and make necessary adjustments to reflect current 
industry and Federal market conditions. This rule is part of the second 
five-year review of size standards in accordance with the Jobs Act. The 
first five-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 size standards 
revisions for industries being adopted in this rule will make size 
standards more reflective of the current economic characteristics of 
businesses in those industries and the latest trends in the Federal 
marketplace.
    The revisions to the existing size standards for 68 industries in 
NAICS Sectors 11, 21, 22, and 23 are consistent with SBA's statutory 
mandate to help small businesses grow and create jobs and to review and 
adjust size standards every five years. This regulatory action promotes 
the Administration's goals and objectives as well as meets the SBA's 
statutory responsibility. One of SBA's goals in support of promoting 
the Administration's objectives is to help small businesses succeed 
through fair and equitable access to capital and credit, Federal 
Government contracts and purchases, and management and technical 
assistance. Reviewing and modifying size standards, when appropriate, 
ensures that intended beneficiaries can 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 regulatory changes and their alternatives.

Changes to Size Standards

    Based on the results from the analysis of the latest industry and 
Federal contracting data, evaluation of public comments and input to 
the proposed rule, as well as consideration of impact of size standards 
changes on small businesses and significant adverse impacts of the 
COVID-19 emergency on small businesses and the overall economic 
activity, of the total of 103 industries in Sectors 11, 21, 22, and 23 
that have receipts-based size standards, SBA is increasing size 
standards for 68 industries (including exceptions), and maintaining 
current size standards for the remaining 35 industries.

The Baseline

    For purposes of this regulatory action, the baseline represents 
maintaining the ``status quo,'' i.e., making no changes to the current 
size standards. Using the number of small businesses and levels of 
benefits (such as set-aside contracts, SBA's loans, disaster 
assistance, etc.) they receive under the current size standards as a 
baseline, one can examine the potential benefits, costs, and transfer 
impacts of changes to size standards on small businesses and on the 
overall economy.
    Based on the 2012 Economic Census (the latest available when this 
rulemaking was developed), of a total of about 2.7 million businesses 
in industries in Sectors 11, 21, 22, and 23 for which SBA is increasing 
their receipts-based size standards, 96.9% are considered small under 
the current size standards. That percentage varies from 95.5% in Sector 
21 to 98.5% in Sector 23. Based on the data from FPDS-NG for fiscal 
years 2018-2020, about 15,567 unique firms in those industries received 
at least one Federal contract during that period, of which 85% were 
small under the current size standards. A total of about $39 billion in 
average annual contract dollars were awarded to businesses in those 
industries during the period of evaluation, and 45.3% 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, 81.8% were awarded through various small business set-aside 
programs and 18.2% were awarded through non-set aside contracts.
    Based on the SBA's internal data on its loan programs for fiscal 
years 2018-2020, small businesses in those industries received, on an 
annual basis, a total of nearly 7,250 7(a) and 504 loans in that 
period, totaling about $2.3 billion, of which 84.8% was issued through 
the 7(a) program and 15.2% was issued through the CDC/504 program. 
During fiscal years 2018-2020, small businesses in those industries 
also received 174 loans through the SBA's Economic Injury Disaster Loan 
(EIDL) program, totaling about $8 million on an annual basis.\2\ Table 
5, Baseline for All

[[Page 18616]]

Industries, provides these baseline results by NAICS sector.
---------------------------------------------------------------------------

    \2\ The analysis of the disaster loan data excludes physical 
disaster loans that are available to anyone regardless of size, 
disaster loans issued to nonprofit entities, and EIDLs issued under 
the COVID-19 relief program. Effective January 1, 2022, SBA stopped 
accepting applications for new COVID EIDL loans or advances. Thus, 
the disaster loan analysis presented here pertains to the regular 
EIDL loans only.
    SBA estimates impacts of size standards changes on EIDL loans by 
calculating the ratio of businesses getting EIDL loans to total 
small businesses (based on the Economic Census data) and multiplying 
it by the number of impacted small firms. Due to data limitations, 
for FY 2019-20, some loans with both physical and EIDL loan 
components could not be broken into the physical and EIDL loan 
amounts. In such cases, SBA applied the ratio of EIDL amount to 
total (physical loan + EIDL) amount using FY 2016-18 data to the FY 
2019-20 data to obtain the amount attributable to the EIDL loans.

                                      Table 5--Baseline for All Industries
----------------------------------------------------------------------------------------------------------------
                                     Sector 11       Sector 21       Sector 22       Sector 23         Total
----------------------------------------------------------------------------------------------------------------
Baseline All Industries (current              64               4               3              32             103
 size standards)................
Total firms (2012 Economic             2,122,631           8,196           3,673         587,173       2,721,673
 Census)........................
Total small firms under current        2,046,316           7,828           3,586         578,430       2,636,160
 size standards (2012 Economic
 Census)........................
Small firms as % of total firms.           96.4%           95.5%           97.6%           98.5%           96.9%
Total contract dollars ($                   $675            $111            $401         $37,913         $39,099
 million) (FPDS-NG, FY2018-2020)
Total small business contract               $478             $25             $75         $17,119         $17,698
 dollars under current standards
 ($ million) (FPDS-NG, FY2018-
 2020)..........................
Small business dollars as % of             70.9%           22.5%           18.7%           45.2%           45.3%
 total dollars (FPDS-NG, FY2018-
 2020)..........................
Total no. of unique firms                  3,259             266             591          11,901          15,567
 getting contracts (FPDS-NG,
 FY2018-2020)...................
Total no. of unique small firms            2,883             188             447          10,063          13,231
 getting small business
 contracts (FPDS-NG, FY2018-
 2020)..........................
Small business firms as % of               88.5%           70.7%           75.6%           84.6%           85.0%
 total firms (FPDS-NG, FY2018-
 2020)..........................
No. of 7(a) and 504/CDC loans                563              70              35           6,579           7,247
 (FY2018-2020)..................
Amount of 7(a) and 504 loans ($             $350             $42             $11          $1,944          $2,347
 million) (FY2018-2020).........
No. of EIDL loans (FY2018-2020)               48               2               1             123             174
 *..............................
Amount of EIDL loans ($ million)            $1.2            $0.1            $0.1            $6.6            $8.0
 (FY2018-2020) *................
----------------------------------------------------------------------------------------------------------------
* Excludes COVID-19 related EIDL loans due to their temporary nature. Effective January 1, 2022, SBA stopped
  accepting applications for new COVID EIDL loans or advances.

Increases to Size Standards

    As stated above, of 103 receipts-based size standards in NAICS 
Sectors 11, 21, 22, and 23 that are reviewed in this rule, based on the 
results from analyses of latest industry and Federal market data, 
impacts of size standards changes on small businesses as well as 
considerations of the impacts of the COVID-19 pandemic and public 
comments to the proposed rule, SBA is increasing 68 and maintaining 35 
size standards. Below are descriptions of the benefits, costs, and 
transfer impacts of these increases to size standards adopted in this 
final rule.
    The results of regulatory impact analyses SBA provided in the 
October 2020 proposed rule were based on the FPDS-NG and SBA loan data 
for fiscal years 2016-2018. In this final rule, SBA is updating the 
impact analysis results by using the FPDS-NG and SBA loan data for 
fiscal years 2018-2020. Accordingly, there can be some differences 
between the proposed rule and this final rule with respect to impacts 
of size standards changes on Federal contracts and SBA loans.

Benefits of Increasing Size Standards

    The most significant benefit to businesses from increases to size 
standards is gaining eligibility for Federal small business assistance 
programs or retaining eligibility for a longer period. These include 
SBA's business loan programs, Economic Injury Disaster Loan (EIDL) 
program, and Federal procurement programs intended for small 
businesses. Federal procurement programs provide targeted, set-aside 
opportunities for small businesses under SBA's various business 
development and contracting programs. These include the 8(a)/Business 
Development (BD) Program, the Small Disadvantaged Businesses (SDB) 
Program, the Historically Underutilized Business Zones (HUBZone) 
Program, the Women-Owned Small Businesses (WOSB) Program, the 
Economically Disadvantaged Women-Owned Small Businesses (EDWOSB) 
Program, and the Service-Disabled Veteran-Owned Small Businesses 
(SDVOSB) Program.
    Besides set-aside contracting and financial assistance discussed 
above, small businesses also benefit through reduced fees, less 
paperwork, and fewer compliance requirements that are available to 
small businesses through Federal Government programs. However, SBA has 
no data to estimate the number of small businesses receiving such 
benefits.
    Based on the 2012 Economic Census (latest available), SBA estimates 
that in 68 industries in NAICS Sectors 11, 21, 22, and 23 for which it 
is increasing size standards, more than 49,400 firms (see Table 6, 
below) not small under the current size standards will become small 
under the revised size standards and therefore become eligible for 
these programs. That represents about 2.4% of all firms classified as 
small under the current size standards in industries for which SBA is 
increasing size standards. The revised size standards will result in an 
increase to the small business share of total receipts in those 
industries from 35.6% to 55.2%.
    With more businesses qualifying as small under the revised 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 2018-2020, SBA estimates that about 90 
firms that are active in Federal contracting in those industries will 
gain small business status under the revised size standards. Based on 
the same data, SBA estimates that those newly qualified small 
businesses under the increases to 68 size standards could receive 
Federal small business contracts totaling about $13 million annually. 
That represents a 1.9% increase to small

[[Page 18617]]

business dollars from the baseline. Table 6, Impacts of Increasing Size 
Standards, provides these results by NAICS sector.
    The added competition from more businesses qualifying as small can 
result in lower prices to the Federal 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 revised size standards, HUBZone firms might end up 
getting more set-aside contracts and fewer full and open contracts, 
thereby resulting in some cost savings to agencies. 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. However, 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 2018-2020, SBA estimates up to about 15 7(a) and 504 loans 
totaling about $8.6 million could be made to these newly qualified 
small businesses in those industries under the revised size standards. 
That represents a 2.3% increase to the loan amount compared to the 
baseline.

                                  Table 6--Impacts of Increasing Size Standards
----------------------------------------------------------------------------------------------------------------
                                     Sector 11       Sector 21       Sector 22       Sector 23         Total
----------------------------------------------------------------------------------------------------------------
No. of industries with increases              60               3               3               2              68
 to size standards..............
Total current small businesses         2,016,066             536           3,586           5,413       2,025,601
 in industries with increases to
 size standards (2012 Economic
 Census)........................
Additional firms qualifying as            49,352              21               9              34          49,415
 small under revised standards
 (2012 Economic Census).........
% of additional firms qualifying            2.4%            3.9%            0.2%            0.6%            2.4%
 as small relative to current
 small businesses in industries
 with increases to size
 standards......................
No. of current unique small                2,866             141             447             501           3,919
 firms getting small business
 contracts in industries with
 increases to size standards
 (FPDS-NG, FY2018-2020) \1\.....
Additional small business firms               64               1              13              14              90
 getting small business status
 (FPDS-NG, FY2018-2020) \1\.....
% increase to small businesses              2.2%            0.7%            2.9%            2.8%            2.3%
 relative to current unique
 small firms getting small
 business contracts in
 industries with increases to
 size standards (FPDS-NG, FY2018-
 2020)..........................
Total small business contract             $475.8            $4.7           $75.0          $113.4          $668.9
 dollars under current standards
 in industries with increases to
 size standards ($ million)
 (FPDS-NG, FY2018-2020).........
Estimated small business dollars            $6.5            $0.0            $3.3            $3.0           $12.8
 available to newly qualified
 small firms (Using avg dollars
 obligated to SBs) ($ million)
 FPDS-NG, FY 2018-2020) \2\.....
% increase to small business                1.4%            0.4%            4.5%            2.6%            1.9%
 dollars relative to total small
 business contract dollars under
 current standards in industries
 with increases to size
 standards......................
Total no. of 7(a) and 504 loans              512               5              35              84             636
 to small business in industries
 with increases to size
 standards (FY2018-2020)........
Total amount of 7(a) and 504              $317.9            $2.0           $11.3           $33.7          $364.9
 loans to small businesses in
 industries with increases to
 size standards ($ million)
 (FY2018-2020)..................
Estimated no. of 7(a) and 504                 12               1               1               1              15
 loans to newly qualified small
 firms..........................
Estimated 7(a) and 504 loan                 $7.5            $0.4            $0.3            $0.4            $8.6
 amount to newly qualified small
 firms ($ million)..............
% increase to 7(a) and 504 loan             2.3%           20.0%            2.9%            1.2%            2.3%
 amount relative to the total
 amount of 7(a) and 504 loans in
 industries with increases to
 size standards.................
Total no. of EIDL loans to small              45               0               1               4              50
 businesses in industries with
 increases to size standards
 (FY2018-2020) \3\..............
Total amount of EIDL loans to               $1.5            $0.0            $0.1            $0.2            $1.8
 small businesses in industries
 with increases to size
 standards ($ million) (FY2018-
 2020) \3\......................
Estimated no. of EIDL loans to                 1               0               1               1               3
 newly qualified small firms \3\
Estimated EIDL loan amount to              $0.01              $0            $0.1           $0.01            $0.1
 newly qualified small firms ($
 million) \3\...................
% increase to EIDL loan amount              2.2%            0.0%          100.0%           25.0%            8.1%
 relative to the total amount of
 EIDL loan amount in industries
 with increases to size
 standards \3\..................
----------------------------------------------------------------------------------------------------------------
\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.

[[Page 18618]]

 
\3\ Excludes COVID-19 related EIDL loans due to their temporary nature. Effective January 1, 2022, SBA stopped
  accepting applications for new COVID EIDL loans or advances.

    Newly qualified small businesses will also benefit from the SBA's 
EIDL program. Because 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 loan data, SBA estimates that, on an 
annual basis, the newly defined small businesses under the increases of 
68 size standards could receive three EIDL loans, totaling about $0.1 
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.

Costs of Increasing Size Standards

    Besides having to register in sam.gov 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 because 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. This 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, 
the latest data, and other relevant factors.
    To the extent that the newly qualified small businesses could 
become active in Federal procurement, the increases to size standards 
may entail some additional administrative costs to the Federal 
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 mentor-prot[eacute]g[eacute] program. With 
an expanded pool of small businesses, it is likely that Federal 
agencies would set aside more contracts for small businesses under the 
revised 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 the number of 
size protests processed shows that the number of size protests 
decreased following the increases to receipts-based size standards as 
part of the first five-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 fiscal year 2013), as compared to about 500 
during fiscal years 2018-2020 when the increases to size standards 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 
revised 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 revised size 
standards. However, the additional costs associated with fewer bidders 
are expected to be minor because, 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 revised 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.

Transfer Impacts of Increasing Size Standards

    The increases to 68 size standards that are adopted in this final 
rule 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 because total Federal contract dollars available for 
businesses to compete for will not change with changes to size 
standards. Although 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 revised size standards, some unrestricted 
Federal contracts which would otherwise be awarded to large businesses 
may be set aside for small businesses. As a result, large businesses 
may lose some Federal contracting opportunities. Similarly, some small 
businesses under the current size standards may obtain fewer set-aside 
contracts due to the increased competition from more advanced 
businesses qualifying as small under the revised 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 changes in this rule. In this section, SBA 
describes and analyzes two such alternatives to the changes in this 
rule. Alternative Option One to the changes in this rule, a more

[[Page 18619]]

stringent alternative, would adopt size standards based solely on the 
analytical results. In other words, the size standards of 68 industries 
or subindustries (``exceptions'') for which the analytical results, as 
presented in Table 4 of the October 2020 proposed rule, suggest raising 
them would be raised. However, the size standards of 35 industries for 
which the analytical results suggest lowering them would be lowered. 
Alternative Option Two would retain 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: Adopting All Calculated Size Standards

    As discussed elsewhere in this 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 five-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 adopt the same general policy of not lowering size standards 
in the ongoing second five-year comprehensive size standards review as 
well.
    The primary benefits of adopting Alternative Option One would 
include: (1) 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; (2) 
Adopting size standards based on the analytical results would also 
promote consistency and predictability in SBA's implementation of its 
authority to set or adjust size standards; and (3) Firms who would 
remain small would face less competition from larger small firms for 
the remaining set-aside opportunities. Specifically, SBA sought public 
comment on the impact of adopting the size standards based on 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 discussed already the benefits, costs, and transfer impacts of 
increasing 68 size standards. Below we discuss the benefits, costs, and 
transfer impacts of decreasing 35 size standards based on the 
analytical results.

Benefits of Decreasing Size Standards Under Alternative Option One

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

Costs of Decreasing Size Standards Under Alternative Option One

    Table 7, Impacts of Decreasing Size Standards Under Alternative 
Option One, below, shows the various impacts of lowering size standards 
in 35 industries based solely on the analytical results. Based on the 
2012 Economic Census, about 5,500 (0.9%) firms would lose their small 
business status under this option. Similarly, based on the FPDS-NG data 
for fiscal years 2018-2020, nearly 500 (5.0%) small businesses 
participating in Federal contracting would lose their small status and 
become ineligible to compete for set-aside contracts.
    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 programs. For 
example, during fiscal years 2018-2020, agencies awarded, on an annual 
basis, about $17 billion in small business contracts in those 35 
industries for which SBA considered decreasing size standards. Lowering 
size standards in those industries could reduce Federal contract 
dollars awarded to small businesses by about $1 billion or 6% relative 
to the baseline level, of which 99% was accounted for by the industries 
in the construction sector (NAICS 23).

                   Table 7--Impacts of Decreasing Size Standards Under Alternative Option One
----------------------------------------------------------------------------------------------------------------
                                     Sector 11       Sector 21       Sector 22       Sector 23         Total
----------------------------------------------------------------------------------------------------------------
No. of industries for which SBA                4               1               0              30              35
 considered decreasing size
 standards (2012 Economic
 Census)........................
Total current small businesses            30,250           7,292               0         573,017         610,559
 in industries for which SBA
 considered decreasing size
 standards (2012 Economic
 Census)........................
Estimated no. of firms losing                 17              16               0           5,479           5,512
 small status for which SBA
 considered decreasing size
 standards (2012 Economic
 Census)........................

[[Page 18620]]

 
% of Firms losing small status              0.1%            0.2%            0.0%            1.0%            0.9%
 relative to current small
 businesses in industries for
 which SBA considered decreasing
 size standards (2012 Economic
 Census)........................
No. of current unique small                   20              48               0           9,787           9,842
 firms getting small business
 contracts in industries for
 which SBA considered decreasing
 size standards (FPDS-NG, FY2018-
 2020) \1\......................
Estimated number of small                      0               0               0             491             491
 business firms that would have
 lost small business status in
 the decreases that SBA
 considered (FPDS-NG, FY2018-
 2020) \1\......................
% decrease to small business                0.0%            0.0%            0.0%            5.0%            5.0%
 firms relative to current
 unique small firms getting
 small business contracts in
 industries for which SBA
 considered decreasing size
 standards (FPDS-NG, FY2018-
 2020)..........................
Total small business contract               $2.4           $20.2            $0.0         $17,006         $17,029
 dollars under current size
 standards in industries for
 which SBA considered decreasing
 size standards ($ million)
 (FPDS-NG FY2018-2020)..........
Estimated small business dollars            $0.0            $0.0            $0.0          $1,019          $1,019
 not available to firms losing
 small business status (Using
 avg dollars obligated to SBs)
 ($ million) \1\ (FPDS-NG FY
 2018-2020) \2\.................
% decrease to small business                0.0%            0.0%            0.0%            6.0%            6.0%
 dollars relative to total small
 business contract dollars under
 current size standards in
 industries for which SBA
 considered decreasing size
 standards (FPDS-NG FY 2018-
 2020)..........................
Total no. of 7(a) and 504 loans               51              65               0           6,495           6,611
 to small businesses in
 industries for which SBA
 considered decreasing size
 standards (FY2018-2020)........
Total amount of 7(a) and 504               $32.0           $40.8            $0.0          $1,910          $1,982
 loans to small businesses in
 industries for which SBA
 considered decreasing size
 standards ($ million) (FY2018-
 2020)..........................
Estimated no. of 7(a) and 504                  1               0               0               4               5
 loans not available to firms
 that would have lost small
 business status................
Estimated 7(a) and 504 loan                 $0.6            $0.0            $0.0            $1.2            $1.8
 amount not available to firms
 that would have lost small
 status ($ million).............
% decrease to 7(a) and 504 loan             0.2%            0.0%            0.0%            0.1%            0.1%
 amount relative to the total
 amount of 7(a) and 504 loans in
 industries for which SBA
 considered decreasing size
 standards......................
Total no. of EIDL loans to small              21               3               0             193             217
 businesses in industries for
 which SBA considered decreasing
 size standards (FY2018-2020)
 \3\............................
Total amount of EIDL loans to               $0.5            $0.2            $0.0            $9.7           $10.4
 small businesses in industries
 for which SBA considered
 decreasing size standards ($
 million) (FY2018-2020) \3\.....
Estimated no. of EIDL loans not                1               1               0               1               3
 available to firms that would
 have lost small business status
 \3\............................
Estimated EIDL loan amount not             $0.02            $0.1            $0.0            $0.1            $0.1
 available to firms that would
 have lost small business status
 ($ million) \3\................
% decrease to EIDL loan amount              4.8%           33.3%            0.0%            0.5%            1.3%
 relative to the total EIDL loan
 amount in industries with
 decreases to size standards \3\
----------------------------------------------------------------------------------------------------------------
\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.
\3\ Excludes COVID-19 related EIDL loans due to their temporary nature. Effective January 1, 2022, SBA stopped
  accepting applications for new COVID EIDL loans or advances.

    Because of the importance of the construction sector for Federal 
procurement and the immediate impact on businesses that will see their 
status as small changed relatively fast, SBA would adopt mitigating 
measures to reduce the negative impact under this option. SBA could 
adopt one or more of the following three actions: (1) Accept decreases 
in size standards as suggested by the analytical results, (2) Decrease 
size standards by a smaller amount than the calculated threshold, and 
(3) Retain the size standards at their current levels.
    Nevertheless, because Federal agencies are still required to meet 
the statutory small business contracting goal of 23%, 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. Lowering size standards may cause current small 
business contract or option holders to lose their small business 
status, thereby making those dollars unavailable to count toward the 
agencies' small business procurement

[[Page 18621]]

goals. Additionally, impacted small businesses will be unable to 
compete for upcoming options as small businesses.
    As shown in Table 7, 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 2018-2020, SBA estimates that, under Alternative 
Option One, about 5 7(a) and 504 loans with total amounts of $1.8 
million could not be made to those small businesses that would lose 
eligibility under the reduced size standards. That represents about 
0.1% decrease of the loan amounts compared to the baseline. 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 by 
way of access to loans through SBA's EIDL loan program. However, SBA 
expects such impact to be minimal. For example, based on the disaster 
loan data for fiscal years 2018-2020, SBA estimates that, under 
Alternative Option One, about 3 EIDL loans with total amounts of $0.1 
million could not be made to those small businesses that would lose 
eligibility under the reduced size standards (before mitigation). That 
represents about 1.3% decrease of the loan amounts compared to the 
baseline. Because this program is contingent on the occurrence and 
severity of a disaster in the future, SBA cannot make a more meaningful 
estimate of the immediate 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 programs, 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.

Transfer Impacts of Decreasing Size Standards Under Alternative Option 
One

    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 increases to size standards, it would have no impact on 
the overall economic activity because total Federal contract dollars 
available for businesses to compete for will stay the same. Although 
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 firms may have more Federal contracting opportunities. However, 
because agencies are still required by law to award 23% of Federal 
dollars to small businesses, SBA expects the movement of set-aside 
contracts to unrestricted competition to be limited. For the same 
reason, small businesses under the reduced size standards are likely to 
obtain more set-aside contracts due to the reduced competition from 
fewer firms 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 such impacts.

Net Impact of Alternative Option One

    To estimate the net impacts of Alternative Option One, SBA used the 
same methodology used to evaluate the impacts of increasing size 
standards (Table 6). However, under Alternative Option One, SBA used 
the calculated size standards instead of the revised size standards to 
determine the impacts of changes to current thresholds. The impact of 
the increases of size standards were already shown in Table 6. Table 7 
and Table 8, Net Impacts of Size Standards Changes under Alternative 
Option One, below, present the impacts of the decreases of size 
standards and the net impact of adopting the calculated results under 
Alternative Option One, respectively.
    Based on the 2012 Economic Census, SBA estimates that in 103 
industries in NAICS Sectors 11, 21, 22, and 23 for which the analytical 
results suggested to change size standards, in aggregate, about 43,900 
firms (see Table 8), would become small under the Alternative Option 
One. That represents about 1.7% of all firms classified as small under 
the current size standards. That is about 5,500 fewer firms qualifying 
as small under Alternative Option One, which represents an 11.0% 
reduction from about 49,400 firms that would qualify as small (see 
Table 6) under the proposal being adopted in this final rule (i.e., 
increasing 68 and retaining 35 size standards).

                   Table 8--Net Impacts of Size Standards Changes Under Alternative Option One
----------------------------------------------------------------------------------------------------------------
                                     Sector 11       Sector 21       Sector 22       Sector 23         Total
----------------------------------------------------------------------------------------------------------------
No. of industries with changes                64               4               3              32             103
 to size standards..............
Total no. of small business            2,046,316           7,828           3,586         578,430       2,636,160
 under the current size
 standards (2012 Economic
 Census)........................
Additional firms qualifying as            49,335               5               9          -5,445          43,902
 small under revised size
 standards (2012 Economic
 Census)........................
% of additional firms qualifying            2.4%            0.1%            0.2%           -0.9%            1.7%
 as small relative to total
 current small businesses.......
No. of current unique small                2,883             188             447          10,063          13,231
 firms getting small business
 contracts (FPDS-NG, FY2018-
 2020) \1\......................
Additional small firms getting                63               1              13            -479            -407
 small business status (FPDS-NG,
 FY2018-2020) \1\...............
% increase to small firms                   2.2%            0.5%            2.9%           -4.8%           -3.1%
 relative to current unique
 small firms getting small
 business contracts (FPDS-NG,
 FY2018-2020)...................

[[Page 18622]]

 
Total small business contract               $478             $25             $75         $17,119         $17,698
 dollars under current size
 standards ($ million) (FPDS-NG,
 FY 2018-2020)..................
Estimated small business dollars            $6.5            $0.0            $3.3         -$1,016         -$1,006
 available to newly qualified
 small firms ($ million) (FPDS-
 NG, FY 2018-2020) \2\..........
% increase to dollars relative              1.4%            0.1%            4.5%           -5.9%           -5.7%
 to total small business
 contract dollars under current
 size standards.................
Total no. of 7(a) and 504 loans              563              70              35           6,579           7,247
 to small businesses (FY2018-
 2020)..........................
Total amount of 7(a) and 504                $350             $42             $11          $1,944          $2,347
 loans to small businesses
 (FY2018-2020)..................
Estimated no. of additional 7(a)              11               1               1              -3              10
 and 504 loans to newly
 qualified small firms..........
Estimated additional 7(a) and               $6.8            $0.4            $0.3           -$0.8            $6.8
 504 loan amount to newly
 qualified small firms ($
 million).......................
% increase to 7(a) and 504 loan             2.2%           20.0%            2.9%            1.1%            2.3%
 amount relative to the total
 amount of 7(a) and 504 loans to
 small businesses...............
Total no. of EIDL loans to small              48               2               1             123             174
 businesses (FY2018-2020) \3\...
Total amount of EIDL loans to               $1.2            $0.1            $0.1            $6.6            $8.0
 small businesses ($ million)
 (FY2018-2020) \3\..............
Estimated no. of additional EIDL               0              -1               1               0               0
 loans to newly qualified small
 firms \3\......................
Estimated additional EIDL loan             $0.01          -$0.06           $0.07          -$0.01           $0.01
 amount to newly qualified small
 firms ($ million) \3\..........
% increase to EIDL loan amount              0.8%          -79.8%          100.0%           -0.1%            0.1%
 relative to the total amount of
 EIDL loans to small businesses
 in industries with changes in
 size standards \3\.............
----------------------------------------------------------------------------------------------------------------
\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.
\3\ Excludes COVID-19 related EIDL loans due to their temporary nature. Effective January 1, 2022, SBA stopped
  accepting applications for new COVID EIDL loans or advances.

    Based on the FPDS-NG data for fiscal years 2018-2020, SBA estimates 
that about 400 active firms in Federal contracting in those industries 
would lose small business status under Alternative Option One, most of 
them from the construction sector. This represents a decrease of about 
3.1% 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 $1.0 billion of Federal procurement dollars 
would not be available to firms losing their small status. This 
represents a decrease of 5.7% from the baseline. Again, a large amount 
of the loses are accounted for by the construction sector.
    Based on the SBA's loan data for fiscal years 2018-2020, the total 
number of 7(a) and 504 loans may increase by about 10 loans, and the 
loan amounts by about $6.8 million (see Table 8). This represents a 
2.3% increase to the loan amount relative to the baseline.
    Firms' participation under the SBA's EIDL loan program will be 
affected as well. Because 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 loan data, SBA estimates that there 
will be no change to the total number of EIDL loans, while the total 
loan amount will increase by about $.01 million. This represents a 0.1% 
increase of the loan amounts relative to the baseline. Table 8 provides 
these results by NAICS sector.

Alternative Option Two: Retaining 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 suggested changing 
them. 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. When compared to the baseline, 
there is a net impact of zero (i.e., zero benefit and zero cost) for 
retaining all size standards. However, this option would cause 
otherwise qualified small businesses to forgo various small business 
benefits (e.g., access to set-aside contracts and capital) that become 
available to them under the option of increasing 68 and retaining 35 
size standards adopted in this final rule. Moreover, retaining all size 
standards under Alternative Option Two would also be contrary to the 
SBA's statutory mandate to review and adjust, every five years, all 
size standards to reflect current industry and Federal market 
conditions. Retaining all size standards without required periodic 
adjustments would increasingly exclude otherwise eligible small 
businesses from small business benefits.

Congressional Review Act

    Subtitle E of the Small Business Regulatory Enforcement Fairness 
Act of 1996 (codified at 5 U.S.C. 801-808), also known as the 
Congressional Review Act or CRA, generally provides that before a rule 
may take effect, the agency promulgating the rule must submit a rule 
report, which includes a copy of the rule, to each House of the 
Congress and to the Comptroller General of the United States. SBA will 
submit a report containing this rule and other required information to 
the U.S. Senate, the U.S. House of Representatives, and the Comptroller 
General of the United States. A major rule under the CRA cannot take 
effect until 60 days after it is published in the Federal Register. 
OMB's Office of Information and Regulatory Affairs has determined that

[[Page 18623]]

this rule is not a ``major rule'' as defined by 5 U.S.C. 804(2).

Final 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 final rule may have a significant impact on a substantial 
number of small businesses in the industries covered by this rule. As 
described above, this rule may affect small businesses seeking Federal 
contracts, loans under SBA's 7(a), 504 and disaster loan programs, and 
assistance under other Federal small business programs.
    Immediately below, SBA sets forth a final regulatory flexibility 
analysis (FRFA) of this rule addressing the following questions: (1) 
What is the need for and objective of the rule? (2) What are SBA's 
description and estimate of the number of small businesses to which the 
rule will apply? (3) What are the projected reporting, record keeping, 
and other compliance requirements of the rule? (4) What are the 
relevant Federal rules that may duplicate, overlap, or conflict with 
the rule? (5) What alternatives will allow SBA 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 industries covered by this 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 rule more 
appropriately reflect the size of businesses that need Federal 
assistance. The 2010 Jobs Act also requires SBA to review all size 
standards and make necessary adjustments to reflect market conditions.
    2. What are SBA's description and estimate of the number of small 
businesses to which the rule will apply?
    Based on data from the 2012 Economic Census, SBA estimates that 
there are about 2.02 million small firms covered by this rulemaking 
under industries with revised size standards. SBA estimates that an 
additional 49,415 businesses will become small under this rulemaking.
    3. What are the projected reporting, record keeping and other 
compliance requirements of the rule?
    The revised size standards 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 (FAR 52.204-13). For existing contracts, small 
business contractors are required to update their SAM registration as 
necessary, to ensure that they reflect the Contractor's current status 
(FAR 52.219-28). Businesses are also required to verify that their SAM 
registration is current, accurate, and complete with the submission of 
an offer for every new contract (FAR 52.204-7 and 52.204-8). Therefore, 
businesses opting to participate in those programs must comply with SAM 
requirements. There are no costs associated with SAM registration or 
certification. Changing size standards alters the access to SBA's 
programs that assist small businesses but does not impose a regulatory 
burden because they neither regulate nor control business behavior.
    4. What are the relevant Federal rules, which may duplicate, 
overlap, or conflict with the rule?
    Under section 3(a)(2)(C) of the Small Business Act, 15 U.S.C. 
632(a)(2)(c), Federal agencies must use SBA's size standards to define 
a small business, unless specifically authorized by statute to do 
otherwise. In 1995, SBA published in the Federal Register a list of 
statutory and regulatory size standards that identified the application 
of SBA's size standards as well as other size standards used by Federal 
agencies (60 FR 57988 (November 24, 1995)). SBA is not aware of any 
Federal rule that would duplicate or conflict with establishing size 
standards.
    However, the Small Business Act and SBA's regulations allow Federal 
agencies to develop different size standards if they believe that SBA's 
size standards are not appropriate for their programs, with the 
approval of SBA's Administrator (13 CFR 121.903). The Regulatory 
Flexibility Act authorizes an agency to establish an alternative small 
business definition, after consultation with the Office of Advocacy of 
the U.S. Small Business Administration (5 U.S.C. 601(3)).
    5. What alternatives will allow SBA 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 increasing 68 and 
maintaining 35 size standards at their current levels. The first 
alternative SBA considered was adopting size standards based solely on 
the analytical results. In other words, the size standards of 68 
industries for which the analytical results suggest raising size 
standards would be raised. However, the size standards of 35 industries 
for which the analytical results suggest lowering them would be 
lowered. This would cause a significant number of small businesses to 
lose their small business status, especially in the construction 
sector. Under the second alternative, in view of the COVID-19 pandemic, 
SBA considered retaining all size standards at the current levels, even 
though the analytical results may suggest increasing 68 and decreasing 
35 size standards. Retaining all size standards at their current levels 
would be more onerous for the small businesses than the option of 
increasing 68 and retaining 35 size standards. Additionally, for the 
first time, SBA evaluated 46 agricultural industries and, based on 
analytical results presented in Table 4 of the October 2020 proposed 
rule, proposed to increase the size standards for all of them. 
Postponing the adoption of the higher calculated size standards would 
be detrimental for otherwise small businesses within those industries 
in terms of access to various small business benefits, including access 
to set-aside contracts and capital through SBA contracting and 
financial programs, and exemptions from paperwork and other compliance 
requirements.

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 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

[[Page 18624]]

Act requires SBA to review at least one-third of all size standards 
during every 18-month period from the date of its enactment (September 
27, 2010) and to review all size standards not less frequently than 
once every five years, thereafter. SBA had already launched a 
comprehensive review of size standards in 2007. In accordance with the 
Jobs Act, SBA completed the comprehensive review of the small business 
size standard for each industry, except those for agricultural 
enterprises previously set by Congress, and made appropriate 
adjustments to size standards for a number of industries to reflect 
current Federal and industry market conditions. The first comprehensive 
review was completed in early 2016. 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 considered 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 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 
rule will not have substantial, direct effects on the States, on the 
relationship between the national Government and the States, or on the 
distribution of power and responsibilities among the various levels of 
Government. Therefore, SBA has determined that this rule has no 
federalism implications warranting preparation of a federalism 
assessment.

Paperwork Reduction Act

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

List of Subjects in 13 CFR Part 121

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

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

PART 121--SMALL BUSINESS SIZE REGULATIONS

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

    Authority: 15 U.S.C. 632, 634(b)(6), 636(a)(36), 662, and 
694a(9); Pub. L. 116-136, Section 1114.


0
2. Section 121.201 is amended in the table ``Small Business Size 
Standards by NAICS Industry'' as follows:
0
a. Revise subsector 111;
0
b. In subsector 112, revise the entries for ``112111'', ``112112'', 
``112120'', ``112210'', ``112320'' through ``112340'', ``112390'', 
``112410'', ``112420'', ``112511'', ``112512'', ``112519'', ``112910'' 
through ``112930'', and ``112990'';
0
c. In subsector 113, revise the entries for ``113110'' and ``113210'';
0
d. In subsector 114, revise the entries for ``114112'', ``114119'', and 
``114210'';
0
e. In subsector 115, revise the entries for ``115111'' through 
``115113'', ``115116'', ``115210'' ``115310'', ``115310 (Exception 
1)'', and ``115310 (Exception 2)'';
0
f. In subsector 213, revise the entries for ``213113'' through 
``213115'';,
0
g. In subsector 221, revise the entries for ``221310'' through 
``221330'';
0
h. In subsector 237, revise the entries for ``237990'' and ``237990 
(Exception)'';
0
i. In subsector 238, revise the entry for ``238290'';
0
j. In subsector 511, revise the entry for ``511210'';
0
k. Revise the entry for ``Sector 92'' at the end of the table;
0
l. Redesignate footnote 17 as footnote 1 and revise it;
0
m. Revise footnote 2;
0
n. Redesignate footnote 20 as footnote 15; and
0
o. Redesignate footnote 19 as footnote 17.
    The revisions read as follows:


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

* * * * *

                                 Small Business Size Standards by NAICS Industry
----------------------------------------------------------------------------------------------------------------
                                                                                  Size standards  Size standards
                NAICS codes                       NAICS U.S. industry title       in millions of   in number of
                                                                                      dollars        employees
----------------------------------------------------------------------------------------------------------------
              Sector 11--Agriculture, Forestry, Fishing and Hunting Subsector 111--Crop Production
----------------------------------------------------------------------------------------------------------------
111110.....................................  Soybean Farming....................            $2.0  ..............
111120.....................................  Oilseed (except Soybean) Farming...             2.0  ..............
111130.....................................  Dry Pea and Bean Farming...........             2.5  ..............
111140.....................................  Wheat Farming......................             2.0  ..............
111150.....................................  Corn Farming.......................            2.25  ..............
111160.....................................  Rice Farming.......................            2.25  ..............
111191.....................................  Oilseed and Grain Combination                   2.0  ..............
                                              Farming.
111199.....................................  All Other Grain Farming............             2.0  ..............
111211.....................................  Potato Farming.....................            3.75  ..............
111219.....................................  Other Vegetable (except Potato) and            3.25  ..............
                                              Melon Farming.
111310.....................................  Orange Groves......................             3.5  ..............
111320.....................................  Citrus (except Orange) Groves......            3.75  ..............
111331.....................................  Apple Orchards.....................             4.0  ..............
111332.....................................  Grape Vineyards....................             3.5  ..............
111333.....................................  Strawberry Farming.................            4.75  ..............
111334.....................................  Berry (except Strawberry) Farming..            3.25  ..............

[[Page 18625]]

 
111335.....................................  Tree Nut Farming...................            3.25  ..............
111336.....................................  Fruit and Tree Nut Combination                  4.5  ..............
                                              Farming.
111339.....................................  Other Noncitrus Fruit Farming......             3.0  ..............
111411.....................................  Mushroom Production................             4.0  ..............
111419.....................................  Other Food Crops Grown Under Cover.             4.0  ..............
111421.....................................  Nursery and Tree Production........            2.75  ..............
111422.....................................  Floriculture Production............            3.25  ..............
111910.....................................  Tobacco Farming....................            2.25  ..............
111920.....................................  Cotton Farming.....................            2.75  ..............
111930.....................................  Sugarcane Farming..................             4.5  ..............
111940.....................................  Hay Farming........................            2.25  ..............
111991.....................................  Sugar Beet Farming.................            2.25  ..............
111992.....................................  Peanut Farming.....................            2.25  ..............
111998.....................................  All Other Miscellaneous Crop                   2.25  ..............
                                              Farming.
----------------------------------------------------------------------------------------------------------------
                                Subsector 112--Animal Production and Aquaculture
----------------------------------------------------------------------------------------------------------------
112111.....................................  Beef Cattle Ranching and Farming...            2.25  ..............
112112.....................................  Cattle Feedlots....................            19.5  ..............
112120.....................................  Dairy Cattle and Milk Production...            3.25  ..............
112210.....................................  Hog and Pig Farming................             3.5  ..............
 
                                                  * * * * * * *
112320.....................................  Broilers and Other Meat Type                    3.0  ..............
                                              Chicken Production.
112330.....................................  Turkey Production..................            3.25  ..............
112340.....................................  Poultry Hatcheries.................             3.5  ..............
112390.....................................  Other Poultry Production...........            3.25  ..............
112410.....................................  Sheep Farming......................             3.0  ..............
112420.....................................  Goat Farming.......................            2.25  ..............
112511.....................................  Finfish Farming and Fish Hatcheries            3.25  ..............
112512.....................................  Shellfish Farming..................            3.25  ..............
112519.....................................  Other Aquaculture..................            3.25  ..............
112910.....................................  Apiculture.........................            2.75  ..............
112920.....................................  Horses and Other Equine Production.             2.5  ..............
112930.....................................  Fur-Bearing Animal and Rabbit                  3.25  ..............
                                              Production.
112990.....................................  All Other Animal Production........             2.5  ..............
----------------------------------------------------------------------------------------------------------------
                                       Subsector 113--Forestry and Logging
----------------------------------------------------------------------------------------------------------------
113110.....................................  Timber Tract Operations............            16.5  ..............
113210.....................................  Forest Nurseries and Gathering of              18.0  ..............
                                              Forest Products.
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
                                  Subsector 114--Fishing, Hunting and Trapping
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
114112.....................................  Shellfish Fishing..................            12.5  ..............
114119.....................................  Other Marine Fishing...............            10.0  ..............
114210.....................................  Hunting and Trapping...............             7.5  ..............
----------------------------------------------------------------------------------------------------------------
                         Subsector 115--Support Activities for Agriculture and Forestry
----------------------------------------------------------------------------------------------------------------
115111.....................................  Cotton Ginning.....................            14.0  ..............
115112.....................................  Soil Preparation, Planting, and                 8.5  ..............
                                              Cultivating.
115113.....................................  Crop Harvesting, Primarily by                  12.0  ..............
                                              Machine.
 
                                                  * * * * * * *
115116.....................................  Farm Management Services...........            13.5  ..............
115210.....................................  Support Activities for Animal                   9.5  ..............
                                              Production.
115310.....................................  Support Activities for Forestry....            10.0  ..............
115310 (Exception 1).......................  Forest Fire Suppression \1\........        \1\ 30.0  ..............
115310 (Exception 2).......................  Fuels Management Services \1\......        \1\ 30.0  ..............
----------------------------------------------------------------------------------------------------------------
                            Sector 21--Mining, Quarrying, and Oil and Gas Extraction
----------------------------------------------------------------------------------------------------------------
 

[[Page 18626]]

 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
                                  Subsector 213--Support Activities for Mining
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
213113.....................................  Support Activities for Coal Mining.            24.0  ..............
213114.....................................  Support Activities for Metal Mining            36.0  ..............
213115.....................................  Support Activities for Nonmetallic             18.0  ..............
                                              Minerals (except Fuels) Mining.
----------------------------------------------------------------------------------------------------------------
                                  Sector 22--Utilities Subsector 221--Utilities
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
221310.....................................  Water Supply and Irrigation Systems            36.0  ..............
221320.....................................  Sewage Treatment Facilities........            31.0  ..............
221330.....................................  Steam and Air-Conditioning Supply..            26.5  ..............
----------------------------------------------------------------------------------------------------------------
                                             Sector 23--Construction
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
                             Subsector 237--Heavy and Civil Engineering Construction
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
237990.....................................  Other Heavy and Civil Engineering              39.5  ..............
                                              Construction.
237990 (Exception).........................  Dredging and Surface Cleanup               \2\ 33.0  ..............
                                              Activities \2\.
----------------------------------------------------------------------------------------------------------------
                                   Subsector 238--Specialty Trade Contractors
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
238290.....................................  Other Building Equipment                       19.5  ..............
                                              Contractors.
 
                                                  * * * * * * *
                             Subsector 511--Publishing Industries (except Internet)
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
511210.....................................  Software Publishers \15\...........       \15\ 41.5  ..............
 
                                                  * * * * * * *
                                             Sector 92--Public Administration
                                              \17\
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
Footnotes
\1\ NAICS code 115310--Support Activities for Forestry: Forest Fire Suppression and Fuels Management Services
  are two components of Support Activities for Forestry. Forest Fire Suppression includes establishments which
  provide services to fight forest fires. These firms usually have fire-fighting crews and equipment. Fuels
  Management Services firms provide services to clear land of hazardous materials that would fuel forest fires.
  The treatments used by these firms may include prescribed fire, mechanical removal, establishing fuel breaks,
  thinning, pruning, and piling.
\2\ NAICS code 237990--Dredging: To be considered small for purposes of Government procurement, a firm or its
  similarly situated subcontractors must perform at least 40 percent of the volume dredged with their own
  equipment or equipment owned by another small dredging concern.
 * * * * * * *
\15\ NAICS code 511210--For purposes of Government procurement, the purchase of software subject to potential
  waiver of the nonmanufacturer rule pursuant to Sec.   121.1203(d) should be classified under this NAICS code.
 * * * * * * *
\17\ NAICS Sector 92--Small business size standards are not established for this sector. Establishments in the
  Public Administration sector are Federal, State, and local Government agencies which administer and oversee
  Government programs and activities that are not performed by private establishments. Concerns performing
  operational services for the administration of a Government program are classified under the NAICS private
  sector industry based on the activities performed. Similarly, procurements for these types of services are
  classified under the NAICS private sector industry that best describes the activities to be performed. For
  example, if a Government agency issues a procurement for law enforcement services, the requirement would be
  classified using one of the NAICS industry codes under NAICS industry 56161, Investigation, Guard, and Armored
  Car Services.
 * * * * * * *



[[Page 18627]]

Isabella Casillas Guzman,
Administrator.
[FR Doc. 2022-06604 Filed 3-30-22; 8:45 am]
BILLING CODE 8026-03-P