[Federal Register Volume 87, Number 62 (Thursday, March 31, 2022)]
[Rules and Regulations]
[Pages 18646-18664]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-06608]


-----------------------------------------------------------------------

SMALL BUSINESS ADMINISTRATION

13 CFR Part 121

RIN 3245-AG88


Small Business Size Standards: Education Services; Health Care 
and Social Assistance; Arts, Entertainment and Recreation; 
Accommodation and Food Services; Other Services

AGENCY: U.S. Small Business Administration.

ACTION: Final rule.

-----------------------------------------------------------------------

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 Education Services; Health Care and Social 
Assistance; Arts, Entertainment and Recreation; Accommodation and Food 
Services; and Other Services. Specifically, SBA is increasing the size 
standards for 70 industries in those sectors, including 14 industries 
in NAICS Sector 61 (Education Services), 18 industries in Sector 62 
(Health Care and Social Assistance), 11 industries in Sector 71 (Arts, 
Entertainment and Recreation), four industries in Sector 72 
(Accommodation and Food Services), and 23 industries in Sector 81 
(Other Services).

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. 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 (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\
---------------------------------------------------------------------------

    \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's 
NAICS 2022 revisions for its table of size standards. SBA 
anticipates updating its size standards with the NAICS 2022 
revisions, effective October 1, 2022.
---------------------------------------------------------------------------

    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 the second five-year review of size standards under the Jobs 
Act, SBA reviewed all receipt-based size standards in NAICS Sectors 61, 
62, 71, 72, and 81 to determine whether the existing size standards 
should be retained or revised based on the current

[[Page 18647]]

industry and Federal market data. After its review, SBA published in 
the November 27, 2020, issue of the Federal Register (85 FR 76390) a 
proposed rule to increase the size standards for 14 industries in NAICS 
Sector 61 (Education Services), 18 industries in Sector 62 (Health Care 
and Social Assistance), 11 industries in Sector 71 (Arts, Entertainment 
and Recreation), four industries in Sector 72 (Accommodation and Food 
Services), and 23 industries in Sector 81 (Other Services). In this 
final rule, SBA is adopting the proposed size standards from the 
November 2020 proposed rule without change.
    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 61, 62, 71, 72, and 81, 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 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 November 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 144 industries and one subindustry (exception) 
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 70 industries, decreasing 
size standards for 63 industries, and retaining size standards for 12 
industries. Table 1, Summary of Calculated Size Standards, below, 
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
----------------------------------------------------------------------------------------------------------------
61............................  Education                     18              14               4               0
                                 Services.
62............................  Health Care and               39              18              18               3
                                 Social
                                 Assistance.
71............................  Arts,                         25              11              11               3
                                 Entertainment
                                 and Recreation.
72............................  Accommodation                 15               4               9               2
                                 and Food
                                 Services.
81............................  Other Services..              48              23              21               4
                                                 ---------------------------------------------------------------
    All Sectors...............  ................             145              70              63              12
----------------------------------------------------------------------------------------------------------------

    In the November 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 70 industries and retain the current size 
standards for the remaining 75 industries or subindustries in Sectors 
61, 62, 71, 72, and 81. 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 weighting of 
individual factors to derive an industry size standard is appropriate; 
and

[[Page 18648]]

whether the data sources used were appropriate or sufficient.

Discussion of Comments

    SBA received a total of 12 comments on the proposed rule, only 
three of which were related to size standards; the other nine comments 
were mostly concerned with impacts from the COVID-19 pandemic and 
getting qualified for government relief, including the Paycheck 
Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) 
Programs, which is beyond the scope of the proposed rule. The comments 
to the proposed rule are available at www.regulations.gov (RIN 3245-
AG88) and are summarized and discussed below.

Comments on Proposed Changes to Size Standards

    Of the three comments that pertained to size standards, one 
expressed general support of the proposed size standards increases in 
the proposed rule, arguing that extending the circle of small 
businesses will help medium-small businesses that have just exceeded 
size standards regain small business status and will allow small 
businesses to grow and still be able to qualify as a small business, 
which will have a positive effect on the U.S. economy. The second 
comment supported the SBA's proposed increase to the size standard for 
NAICS 624410 (Child Day Care Services) from $8 million to $8.5 million. 
The commenter stated that the proposed change supports childcare and 
preschool services, which are severely impacted by the COVID-19 
pandemic, as the change will enable them to obtain financial support to 
survive.
    The third comment was from an industry association representing 
amusement or theme parks, water parks, attractions, family 
entertainment centers, arcades, ariel adventure courses, zoos, 
aquariums, museums, science centers, and resorts categories, which fall 
under NAICS 713110 (Amusement and Theme Parks) with the current size 
standard of $41.5 million, which happens to be the highest of any 
receipts-based size standards. Citing increasing operating costs and 
increased investments to comply with the COVID-19 pandemic 
requirements, the commenter urged SBA to increase the size standard for 
NAICS 713110. Specifically, the association urged SBA to either 
consider changing the measure of SBA size eligibility for NAICS 713110 
from receipts to net income or to substantially increase its receipts-
based size standard.

SBA Response

    SBA rejects the association's suggestion for the following reasons. 
First, section 3(a)(2)(C)(ii)(II) of the Small Business Act provides 
that the size of a business concern providing services (such as those 
in NAICS 713110) must be determined based on the annual average gross 
receipts. Accordingly, SBA rejects net income as a measure of size for 
NAICS 713110. Second, in accordance with its ``Size Standards 
Methodology'' SBA caps the highest receipts-based size standard at 
$41.5 million, above which no business concern could be classified as 
small. Because NAICS 713110 already has the highest possible $41.5 
million receipts-based size standard, SBA cannot increase the size 
standard for that NAICS code beyond $41.5 million. SBA agrees with a 
comment that expressed general support to the proposed rule and another 
comment that supported the SBA proposed increase to the size standard 
for NAICS 624410.

Summary of Adopted Revisions to Size Standards

    Based on the evaluation of public comments it received on the 
proposed rule and on its analyses of industry and Federal contracting 
factors using the latest available data when the proposed rule was 
prepared, and given the expressed support for SBA's proposed increases 
and the absence of any significant adverse comments opposing the 
increase, SBA is adopting the size standards as proposed in the 
November 2020 proposed rule. Thus, SBA is increasing the size standards 
for 14 industries in NAICS Sector 61, 18 industries in Sector 62, 11 
industries in Sector 71, four industries in Sector 72, and 23 
industries in Sector 81. A summary of SBA's size standards revisions in 
this rule can be found in Table 2, Summary of Size Standards Revisions 
in NAICS Sectors 61, 62, 71, 72, and 81.

               Table 2--Summary of Size Standards Revisions in NAICS Sectors 61, 62, 71, 72 and 81
----------------------------------------------------------------------------------------------------------------
                                                                   Current size     Calculated     Adopted size
             NAICS code               NAICS U.S. industry title     standard ($    size standard    standard ($
                                                                     million)       ($ million)      million)
----------------------------------------------------------------------------------------------------------------
611110.............................  Elementary and Secondary              $12.0           $17.5           $17.5
                                      Schools.
611210.............................  Junior Colleges............            22.0            28.5            28.5
611310.............................  Colleges, Universities, and            30.0            30.5            30.5
                                      Professional Schools.
611410.............................  Business and Secretarial                8.0            18.0            18.0
                                      Schools.
611420.............................  Computer Training..........            12.0            14.0            14.0
611430.............................  Professional and Management            12.0            13.0            13.0
                                      Development Training.
611511.............................  Cosmetology and Barber                  8.0            11.5            11.5
                                      Schools.
611512.............................  Flight Training............            30.0            28.0            30.0
611513.............................  Apprenticeship Training....             8.0            10.0            10.0
611519.............................  Other Technical and Trade              16.5            18.5            18.5
                                      Schools.
611519 (Exception).................  Job Corps Centers..........            41.5            37.0            41.5
611610.............................  Fine Arts Schools..........             8.0             7.0             8.0
611620.............................  Sports and Recreation                   8.0             7.0             8.0
                                      Instruction.
611630.............................  Language Schools...........            12.0            18.0            18.0
611691.............................  Exam Preparation and                    8.0            11.0            11.0
                                      Tutoring.
611692.............................  Automobile Driving Schools.             8.0             9.0             9.0
611699.............................  All Other Miscellaneous                12.0            14.5            14.5
                                      Schools and Instruction.
611710.............................  Educational Support                    16.5            21.0            21.0
                                      Services.
621111.............................  Offices of Physicians                  12.0            14.0            14.0
                                      (except Mental Health
                                      Specialists).
621112.............................  Offices of Physicians,                 12.0             8.0            12.0
                                      Mental Health Specialists.
621210.............................  Offices of Dentists........             8.0             7.5             8.0
621310.............................  Offices of Chiropractors...             8.0             6.5             8.0
621320.............................  Offices of Optometrists....             8.0             6.5             8.0
621330.............................  Offices of Mental Health                8.0             7.0             8.0
                                      Practitioners (except
                                      Physicians).

[[Page 18649]]

 
621340.............................  Offices of Physical,                    8.0            11.0            11.0
                                      Occupational and Speech
                                      Therapists, and
                                      Audiologists.
621391.............................  Offices of Podiatrists.....             8.0             6.5             8.0
621399.............................  Offices of All Other                    8.0             9.0             9.0
                                      Miscellaneous Health
                                      Practitioners.
621410.............................  Family Planning Centers....            12.0            16.5            16.5
621420.............................  Outpatient Mental Health               16.5            14.0            16.5
                                      and Substance Abuse
                                      Centers.
621491.............................  HMO Medical Centers........            35.0            39.0            39.0
621492.............................  Kidney Dialysis Centers....            41.5            41.5            41.5
621493.............................  Freestanding Ambulatory                16.5            15.5            16.5
                                      Surgical and Emergency
                                      Centers.
621498.............................  All Other Outpatient Care              22.0            22.5            22.5
                                      Centers.
621511.............................  Medical Laboratories.......            35.0            36.5            36.5
621512.............................  Diagnostic Imaging Centers.            16.5            15.0            16.5
621610.............................  Home Health Care Services..            16.5            16.5            16.5
621910.............................  Ambulance Services.........            16.5            20.0            20.0
621991.............................  Blood and Organ Banks......            35.0            34.5            35.0
621999.............................  All Other Miscellaneous                16.5            18.0            18.0
                                      Ambulatory Health Care
                                      Services.
622110.............................  General Medical and                    41.5            30.0            41.5
                                      Surgical Hospitals.
622210.............................  Psychiatric and Substance              41.5            23.5            41.5
                                      Abuse Hospitals.
622310.............................  Specialty (except                      41.5            30.0            41.5
                                      Psychiatric and Substance
                                      Abuse) Hospitals.
623110.............................  Nursing Care Facilities                30.0            25.0            30.0
                                      (Skilled Nursing
                                      Facilities).
623210.............................  Residential Intellectual               16.5            15.5            16.5
                                      and Developmental
                                      Disability Facilities.
623220.............................  Residential Mental Health              16.5            15.0            16.5
                                      and Substance Abuse
                                      Facilities.
623311.............................  Continuing Care Retirement             30.0            22.5            30.0
                                      Communities.
623312.............................  Assisted Living Facilities             12.0            20.5            20.5
                                      for the Elderly.
623990.............................  Other Residential Care                 12.0            14.0            14.0
                                      Facilities.
624110.............................  Child and Youth Services...            12.0            13.5            13.5
624120.............................  Services for the Elderly               12.0            13.0            13.0
                                      and Persons with
                                      Disabilities.
624190.............................  Other Individual and Family            12.0            14.0            14.0
                                      Services.
624210.............................  Community Food Services....            12.0            17.0            17.0
624221.............................  Temporary Shelters.........            12.0            11.5            12.0
624229.............................  Other Community Housing                16.5            16.5            16.5
                                      Services.
624230.............................  Emergency and Other Relief             35.0            36.5            36.5
                                      Services.
624310.............................  Vocational Rehabilitation              12.0            13.0            13.0
                                      Services.
624410.............................  Child Day Care Services....             8.0             8.5             8.5
711110.............................  Theater Companies and                  22.0            20.0            22.0
                                      Dinner Theaters.
711120.............................  Dance Companies............            12.0            16.0            16.0
711130.............................  Musical Groups and Artists.            12.0            13.0            13.0
711190.............................  Other Performing Arts                  30.0            29.5            30.0
                                      Companies.
711211.............................  Sports Teams and Clubs.....            41.5            29.5            41.5
711212.............................  Racetracks.................            41.5            33.5            41.5
711219.............................  Other Spectator Sports.....            12.0            14.5            14.5
711310.............................  Promoters of Performing                35.0            23.5            35.0
                                      Arts, Sports, and Similar
                                      Events with Facilities.
711320.............................  Promoters of Performing                16.5            19.5            19.5
                                      Arts, Sports, and Similar
                                      Events without Facilities.
711410.............................  Agents and Managers for                12.0            15.5            15.5
                                      Artists, Athletes,
                                      Entertainers, and Other
                                      Public Figures.
711510.............................  Independent Artists,                    8.0             8.0             8.0
                                      Writers, and Performers.
712110.............................  Museums....................            30.0            25.5            30.0
712120.............................  Historical Sites...........             8.0            11.5            11.5
712130.............................  Zoos and Botanical Gardens.            30.0            25.0            30.0
712190.............................  Nature Parks and Other                  8.0            17.0            17.0
                                      Similar Institutions.
713110.............................  Amusement and Theme Parks..            41.5            41.5            41.5
713120.............................  Amusement Arcades..........             8.0             8.0             8.0
713210.............................  Casinos (except Casino                 30.0            25.0            30.0
                                      Hotels).
713290.............................  Other Gambling Industries..            35.0            25.0            35.0
713910.............................  Golf Courses and Country               16.5            11.0            16.5
                                      Clubs.
713920.............................  Skiing Facilities..........            30.0            31.0            31.0
713930.............................  Marinas....................             8.0             9.5             9.5
713940.............................  Fitness and Recreational                8.0            15.5            15.5
                                      Sports Centers.
713950.............................  Bowling Centers............             8.0            11.0            11.0
713990.............................  All Other Amusement and                 8.0             7.0             8.0
                                      Recreation Industries.
721110.............................  Hotels (except Casino                  35.0            30.5            35.0
                                      Hotels) and Motels.
721120.............................  Casino Hotels..............            35.0            31.0            35.0
721191.............................  Bed-and-Breakfast Inns.....             8.0             6.5             8.0
721199.............................  All Other Traveler                      8.0             8.0             8.0
                                      Accommodation.
721211.............................  RV (Recreational Vehicle)               8.0             9.0             9.0
                                      Parks and Campgrounds.
721214.............................  Recreational and Vacation               8.0             8.0             8.0
                                      Camps (except Campgrounds).
721310.............................  Rooming and Boarding                    8.0            12.5            12.5
                                      Houses, Dormitories, and
                                      Workers' Camps.
722310.............................  Food Service Contractors...            41.5            38.0            41.5
722320.............................  Caterers...................             8.0             6.5             8.0

[[Page 18650]]

 
722330.............................  Mobile Food Services.......             8.0             6.5             8.0
722410.............................  Drinking Places (Alcoholic              8.0             6.5             8.0
                                      Beverages).
722511.............................  Full-Service Restaurants...             8.0            10.0            10.0
722513.............................  Limited-Service Restaurants            12.0            11.0            12.0
722514.............................  Cafeterias, Grill Buffets,             30.0            15.5            30.0
                                      and Buffets.
722515.............................  Snack and Nonalcoholic                  8.0            20.0            20.0
                                      Beverage Bars.
811111.............................  General Automotive Repair..             8.0             8.0             8.0
811112.............................  Automotive Exhaust System               8.0             7.0             8.0
                                      Repair.
811113.............................  Automotive Transmission                 8.0             6.5             8.0
                                      Repair.
811118.............................  Other Automotive Mechanical             8.0             7.5             8.0
                                      and Electrical Repair and
                                      Maintenance.
811121.............................  Automotive Body, Paint, and             8.0             7.0             8.0
                                      Interior Repair and
                                      Maintenance.
811122.............................  Automotive Glass                       12.0            15.5            15.5
                                      Replacement Shops.
811191.............................  Automotive Oil Change and               8.0             9.5             9.5
                                      Lubrication Shops.
811192.............................  Car Washes.................             8.0             8.0             8.0
811198.............................  All Other Automotive Repair             8.0             9.0             9.0
                                      and Maintenance.
811211.............................  Consumer Electronics Repair             8.0            22.5            22.5
                                      and Maintenance.
811212.............................  Computer and Office Machine            30.0            17.5            30.0
                                      Repair and Maintenance.
811213.............................  Communication Equipment                12.0            19.5            19.5
                                      Repair and Maintenance.
811219.............................  Other Electronic and                   22.0            22.0            22.0
                                      Precision Equipment Repair
                                      and Maintenance.
811310.............................  Commercial and Industrial               8.0            11.0            11.0
                                      Machinery and Equipment
                                      (except Automotive and
                                      Electronic) Repair and
                                      Maintenance.
811411.............................  Home and Garden Equipment               8.0             7.0             8.0
                                      Repair and Maintenance.
811412.............................  Appliance Repair and                   16.5            12.5            16.5
                                      Maintenance.
811420.............................  Reupholstery and Furniture              8.0             6.5             8.0
                                      Repair.
811430.............................  Footwear and Leather Goods              8.0             7.5             8.0
                                      Repair.
811490.............................  Other Personal and                      8.0             6.5             8.0
                                      Household Goods Repair and
                                      Maintenance.
812111.............................  Barber Shops...............             8.0             8.5             8.5
812112.............................  Beauty Salons..............             8.0             8.5             8.5
812113.............................  Nail Salons................             8.0             6.5             8.0
812191.............................  Diet and Weight Reducing               22.0            24.0            24.0
                                      Centers.
812199.............................  Other Personal Care                     8.0             6.5             8.0
                                      Services.
812210.............................  Funeral Homes and Funeral               8.0            11.0            11.0
                                      Services.
812220.............................  Cemeteries and Crematories.            22.0            18.5            22.0
812310.............................  Coin-Operated Laundries and             8.0            11.5            11.5
                                      Drycleaners.
812320.............................  Drycleaning and Laundry                 6.0             7.0             7.0
                                      Services (except Coin-
                                      Operated).
812331.............................  Linen Supply...............            35.0            32.0            35.0
812332.............................  Industrial Launderers......            41.5            40.5            41.5
812910.............................  Pet Care (except                        8.0             6.5             8.0
                                      Veterinary) Services.
812921.............................  Photofinishing Laboratories            22.0            26.0            26.0
                                      (except One-Hour).
812922.............................  One-Hour Photofinishing....            16.5            16.0            16.5
812930.............................  Parking Lots and Garages...            41.5            25.5            41.5
812990.............................  All Other Personal Services             8.0            13.0            13.0
813110.............................  Religious Organizations....             8.0            11.5            11.5
813211.............................  Grantmaking Foundations....            35.0            35.0            35.0
813212.............................  Voluntary Health                       30.0            27.0            30.0
                                      Organizations.
813219.............................  Other Grantmaking and                  41.5            22.5            41.5
                                      Giving Services.
813311.............................  Human Rights Organizations.            30.0            28.5            30.0
813312.............................  Environment, Conservation              16.5            17.0            17.0
                                      and Wildlife Organizations.
813319.............................  Other Social Advocacy                   8.0            16.0            16.0
                                      Organizations.
813410.............................  Civic and Social                        8.0             8.5             8.5
                                      Organizations.
813910.............................  Business Associations......             8.0            13.5            13.5
813920.............................  Professional Organizations.            16.5            20.5            20.5
813930.............................  Labor Unions and Similar                8.0            14.5            14.5
                                      Labor Organizations.
813940.............................  Political Organizations....             8.0            12.5            12.5
813990.............................  Other Similar Organizations             8.0            12.0            12.0
                                      (except Business,
                                      Professional, Labor, and
                                      Political Organizations).
----------------------------------------------------------------------------------------------------------------

    Table 3, Summary of Adopted Size Standards Revisions by Sector, 
summarizes the adopted changes to size standards by NAICS sector.

                         Table 3--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
----------------------------------------------------------------------------------------------------------------
61............................  Education                     18              14               0               4
                                 Services.
62............................  Health Care and               39              18               0              21
                                 Social
                                 Assistance.

[[Page 18651]]

 
71............................  Arts,                         25              11               0              14
                                 Entertainment
                                 and Recreation.
72............................  Accommodation                 15               4               0              11
                                 and Food
                                 Services.
81............................  Other Services..              48              23               0              25
                                                 ---------------------------------------------------------------
    All Sectors...............  ................             145              70               0              75
----------------------------------------------------------------------------------------------------------------

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 size 
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 70 industries, decreasing them for 
63 industries, and retaining them at their current levels for 12 
industries. Alternative Option Two was to retain all current size 
standards.
    SBA is not adopting 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. Impacts of lowering size 
standards under Alternative Option One are discussed in detail in the 
Regulatory Impact Analysis section of this rule. Lowering size 
standards in the current environment would also run counter to various 
measures the Federal Government has implemented to help 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 policy of not decreasing size standards 
during the first five-year review of size standards, even though the 
data supported decreases.
    Under Alternative Option Two, given the current COVID-19 pandemic, 
SBA considered retaining the current level of all size standards even 
though the current analysis may suggest changing them. 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 because results discussed in the 
Regulatory Impact Analysis section, below, shows 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 70 and retaining 75 
size standards. 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.

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 
final 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 regulatory action, (2) An examination of alternative 
approaches, and (3) An evaluation of the benefits and costs--both 
quantitative and qualitative--of the regulatory action and the 
alternatives considered.

Regulatory Impact Analysis

    1. What is the 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 final 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 the 
size standards revisions adopted for industries being reviewed in this 
final rule will make size standards more reflective of the current 
economic characteristics of businesses in those

[[Page 18652]]

industries and the latest trends in Federal marketplace.
    The revisions to the existing size standards for 70 industries in 
NAICS Sectors 61, 62, 71, 72, and 81 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 are 
able to access Federal small business programs that are designed to 
assist them to become competitive and create jobs.
    2. What are the potential benefits and costs of this regulatory 
action?
    OMB directs agencies to establish an appropriate baseline to 
evaluate any benefits, costs, or transfer impacts of regulatory actions 
and alternative approaches considered. The baseline should represent 
the agency's best assessment of what the world would look like absent 
the regulatory action. For a new regulatory action promulgating 
modifications to an existing regulation (such as modifying the existing 
size standards), a baseline assuming no change to the regulation (i.e., 
making no changes to current size standards) generally provides an 
appropriate benchmark for evaluating benefits, costs, or transfer 
impacts of regulatory changes and their alternatives.

Changes to Size Standards

    Based on the results from the analyses of the latest industry and 
Federal contracting data, evaluation of the public comments on the 
proposed rule, as well as consideration of the impact of size standards 
changes on small businesses and significant adverse impacts of the 
COVID-19 emergency on small businesses and the overall economic 
activity, of the total of 145 industries in Sectors 61, 62, 71, 72, and 
81 that have receipts-based size standards, SBA is adopting increases 
to size standards for 70 industries and maintaining current size 
standards for the remaining 75 industries (including exceptions).

The Baseline

    For purposes of this regulatory action, the baseline represents 
maintaining the ``status quo,'' i.e., making no changes to the current 
size standards. Using the number of small businesses and levels of 
benefits (such as set-aside contracts, SBA's loans, disaster 
assistance, etc.) they receive under the current size standards as a 
baseline, one can examine the potential benefits, costs, and transfer 
impacts of changes to size standards on small businesses and on the 
overall economy.
    Based on the 2012 Economic Census (the latest available), of a 
total of about 2,016,327 businesses in industries in Sectors 61, 62, 
71, 72, and 81 for which SBA evaluated their current receipts-based 
size standards, 98.0% are considered small under the current size 
standards. That percentage varies from 95.9% in Sector 61 to 98.8% in 
Sector 81. Based on the data from FPDS-NG for fiscal years 2018-2020, 
about 23,250 unique firms in those industries with receipts-based size 
standards, received at least one Federal contract during that period, 
of which 76.6% were small under the current size standards. For these 
sectors, of about $19 billion in total average annual contract dollars 
awarded to businesses during that period, 27.9% went to small 
businesses. From the total small business contract dollars awarded 
during the period considered, 66.4% were awarded through various small 
business set-aside programs and 33.6% 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 21,350 7(a) and 504 loans in that period, 
totaling about $12.3 billion, of which 82.3% was issued through the 
7(a) program and 17.7% was issued through the CDC/504 program. During 
fiscal years 2018-2020, small businesses in those industries also 
received 1,104 loans through the SBA's Economic Injury Disaster Loan 
(EIDL) program, totaling about $53.3 million on an annual basis.\2\ 
Table 4, Baseline for All Industries, below, provides these baseline 
results by 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.
---------------------------------------------------------------------------

Increases to Size Standards

    As stated above, of 145 receipts-based size standards in Sectors 
61, 62, 71, 72, and 81 reviewed, based on the results from analyses of 
latest industry and Federal market data as well as impacts of size 
standards changes on small businesses and the consideration of comments 
to the proposed rule, SBA is adopting increases to size standards for 
70 industries. Below are descriptions of the benefits, costs, and 
transfer impacts of the increases to size standards adopted in this 
final rule.
    The results of regulatory impact analyses SBA provided in the 
November 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.

                                                          Table 4--Baseline for All Industries
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Sector 61       Sector 62       Sector 71       Sector 72       Sector 81         Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline All Industries (current size standards)........              18              39              25              15              48             145
Total firms (2012 Economic Census)......................          84,084         653,143         114,926         496,856         667,318       2,016,327
Total small firms under current size standards (2012              80,620         632,077         112,612         490,773         659,559       1,975,640
 Economic Census).......................................
Small firms as % of total firms.........................           95.9%           96.8%           98.0%           98.8%           98.8%           98.0%

[[Page 18653]]

 
Total contract dollars ($ million) (FPDS-NG FY2018-2020)          $3,624         $11,143            $240            $837          $3,270         $19,114
Total small business contract dollars under current               $1,510          $2,393            $170            $450            $815         $5,338.
 standards ($ million) (FPDS-NG FY2020-2018)............
Small business dollars as % of total dollars (FPDS-NG              41.7%           21.5%           71.0%           53.8%           24.9%           27.9%
 FY2018-2020)...........................................
Total No. of unique firms getting contracts (FPDS-NG               3,651           6,040             971           3,162          10,096          23,251
 FY2018-2020)...........................................
Total No. of unique small firms getting small business             2,772           4,950             867           2,625           6,935          17,799
 contracts (FPDS-NG FY2018-2020)........................
Small business firms as % of total firms................           75.9%           82.0%           89.3%           83.0%           68.7%           76.6%
No. of 7(a) and 504/CDC loans (FY 2018-2020)............             872           5,248           2,030           7,838           5,362          21,350
Amount of 7(a) and 504 loans ($ million) (FY 2018-2020).            $365          $3,117          $1,045          $5,328          $2,421         $12,276
No. of EIDL loans (FY 2018-2020) *......................              51             317             101             298             337           1,104
Amount of EIDL loans ($million) (FY 2018-2020) *........            $2.2           $20.2            $4.7           $16.2           $10.0           $53.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
* 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.

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 that eligibility for a longer period. These 
include SBA's business loan programs, EIDL program, and Federal 
procurement programs intended for small businesses. Federal procurement 
programs provide targeted, set-aside opportunities for small businesses 
under SBA's various business development and contracting programs. 
These include the 8(a)/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 the 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 70 industries in NAICS Sectors 61, 62, 71, 72, and 81 for which 
it is increasing size standards, about 4,700 firms (see Table 5), not 
small under the current size standards, will become small under the 
adopted size standards increases and therefore become eligible for 
these programs. That represents about 0.4% of all firms classified as 
small under the current size standards in industries for which SBA is 
adopting increases to size standards. SBA's revised size standards 
would result in an increase to the small business share of total 
receipts in those industries from 37.4% to 38.5%.
    With more businesses qualifying as small under the adopted 
increases to size standards, Federal agencies will have a larger pool 
of small businesses from which to draw for their small business 
procurement programs. Growing small businesses that are close to 
exceeding the current size standards will be able to retain their small 
business status for a longer period under the higher size standards, 
thereby enabling them to continue to benefit from the small business 
programs.
    Based on the FPDS-NG data for fiscal years 2018-2020, SBA estimates 
that about 238 firms that are active in Federal contracting in those 
industries would gain small business status under the adopted size 
standards. Based on the same data, SBA estimates that those newly 
qualified small businesses under the increases to 70 size standards 
could receive Federal small business contracts totaling about $60 
million annually. That represents a 2.3% increase to small business 
dollars from the baseline. Table 5, Impacts of Increasing Size 
Standards, provides these results by NAICS sector.

                                                      Table 5--Impacts of Increasing Size Standards
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Sector 61       Sector 62       Sector 71       Sector 72       Sector 81         Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
No. of industries with increases to size standards......              14              18              11               4              23              70
Total current small businesses in industries with                 53,788         350,287          47,893         243,299         428,410       1,123,676
 increases to size standards (2012 Economic Census).....
Additional firms qualifying as small under standards                 708           1,464             265             599           1,671           4,708
 (2012 Economic Census).................................
Percentage of additional firms qualifying as small                  1.3%            0.4%            0.6%            0.3%            0.4%            0.4%
 relative to current small businesses in industries with
 increases to size standards............................

[[Page 18654]]

 
No. of current unique small firms getting small business           2,627           2,944             306             689           2,906           9,302
 contracts in industries with increases to size
 standards (FPDS-NG FY2018-2020) \1\....................
Additional small business firms getting small business                32              30               9               0             173             238
 status (FPDS-NG FY2018-2020)...........................
% increase to small businesses relative to current                  1.2%            1.0%            2.9%            0.0%            6.0%            2.6%
 unique small firms getting small business contracts in
 industries with increases to size standards (FPDS-NG
 FY2018-2020) \1\.......................................
Total small business contract dollars under current               $1,278          $1,068             $26             $12            $269          $2,652
 standards in industries with increases to size
 standards ($ million) (FPDS-NG FY2018-2020)............
Estimated additional small business dollars available to           $25.9           $15.7            $2.2            $0.0           $16.3           $60.1
 newly qualified small firms (Using avg dollars
 obligated to SBs) ($ million) (FPDS-NG FY 2018-2020)
 \1\....................................................
% increase to small business dollars relative to total              2.0%            1.5%            8.5%            0.1%            6.0%            2.3%
 small business contract dollars under current standards
 in industries with increases to size standards.........
Total no. of 7(a) and 504 loans to small business in                 501           2,795           1,370           3,770           2,374          10,810
 industries with increases to size standards (FY 2018-
 2020)..................................................
Total amount of 7(a) and 504 loans to small businesses              $201          $1,840            $639          $1,580            $936          $5,196
 in industries with increases to size standards ($
 million) (FY 2018-2020)................................
Estimated no. of 7(a) and 504 loans to newly qualified                 7              12               8              10              10              47
 small firms............................................
Estimated 7(a) and 504 loan amounts to newly qualified              $2.8            $7.9            $3.7            $4.2            $3.9           $22.6
 small firms ($ million)................................
% increase to 7(a) and 504 loan amounts relative to the             1.4%            0.4%            0.6%            0.3%            0.4%            0.4%
 total amount of 7(a) and 504 loans in industries with
 increases to size standards............................
Total no. of EIDL loans to small businesses in                        36             178              38             157             171             580
 industries with increases to size standards (FY 2018-
 2020) \3\..............................................
Total amount of EIDL loans to small businesses in                   $1.8           $11.0            $1.8            $9.5            $5.1           $29.0
 industries with increases to size standards ($ million)
 (FY 2018-2020) \3\.....................................
Estimated no. of EIDL loans to newly qualified small                   1               1               1               1               1               5
 firms \3\..............................................
Estimated EIDL loan amount to newly qualified small                $0.05           $0.06           $0.05           $0.06           $0.03           $0.25
 firms ($ million) \3\..................................
% increase to EIDL loan amount relative to the total                2.8%            0.6%            2.6%            0.6%            0.6%            0.9%
 amount of EIDL loans 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.
\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.

    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 adopted increases to size standards, HUBZone firms 
might receive more set-aside contracts and fewer full and open 
contracts, thereby resulting in some cost savings to

[[Page 18655]]

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.
    As shown in Table 5, under SBA's 7(a) and 504 loan programs, based 
on the data for fiscal years 2018-2020, SBA estimates up to about 47 
SBA 7(a) and 504 loans totaling about $ 22.6 million could be made to 
these newly-qualified small businesses in those industries under the 
adopted size standards. That represents a 0.4% increase to the loan 
amount compared to the group baseline.
    Newly-qualified small businesses will also benefit from the SBA's 
EIDL program. Because the benefits provided through this program are 
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 disaster loan program data, SBA estimates 
that, on an annual basis, the newly-defined small businesses under the 
adopted increases to size standards could receive five disaster loans, 
totaling about $0.3 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 the System for Award Management (SAM) 
to be eligible to participate in Federal contracting and update the SAM 
profile annually, small businesses incur no direct costs to gain or 
retain their small business status as a result of increases to size 
standards. All businesses willing to do business with the Federal 
Government must register in SAM and update their SAM profiles annually, 
regardless of their size status. SBA believes that a vast majority of 
businesses that are willing to participate in Federal contracting are 
already registered in SAM and update their SAM profiles annually. This 
final 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 adopted 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 adopted increases to size standards. One may surmise that 
this might result in a higher number of small business size protests 
and additional processing costs to agencies. However, the SBA's 
historical data on the number 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 
size standards increases were in effect. That represents a 17% decline.
    Among those newly-defined small businesses seeking SBA's loans, 
there could be some additional costs associated with verification of 
their small business status. However, small business lenders have an 
option of using the tangible net worth and net income-based alternative 
size standard instead of using the industry-based size standards to 
establish eligibility for SBA's loans. For these reasons, SBA believes 
that these added administrative costs will be minor because necessary 
mechanisms are already in place to handle these added requirements.
    Additionally, some Federal contracts may possibly have higher 
costs. With a greater number of businesses defined as small due to the 
adopted increases to size standards, Federal agencies may choose to 
set-aside more contracts for competition among small businesses only 
instead of using a full and open competition. The movement of contracts 
from unrestricted competition to small business set-aside contracts 
might result in competition among fewer total bidders, although there 
will be more small businesses eligible to submit offers under the 
adopted 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 adopted increases to size standards, HUBZone firms 
might 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 70 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 adopted increases to size standards, some 
unrestricted Federal contracts that would otherwise be awarded to large 
businesses may be set aside for small businesses. As a result, large 
businesses may lose some Federal contracting opportunities. Similarly, 
some small businesses under the current size standards may obtain fewer 
set-aside contracts due to the increased competition from larger 
businesses qualifying as small under the adopted increases to size 
standards. This impact may be offset by a greater number of 
procurements being set-aside for all small businesses. With larger 
businesses qualifying as small under the higher size standards, smaller 
small businesses could face some disadvantage in competing for set-
aside contracts against their larger counterparts. However, SBA cannot 
quantify these impacts.

[[Page 18656]]

    3. What alternatives have been considered?
    Under OMB Circular A-4, SBA is required to consider regulatory 
alternatives to the adopted changes in this final rule. In this 
section, SBA describes and analyzes two such alternatives. Alternative 
Option One to the final rule, a more stringent alternative to the 
adopted change, would propose adopting size standards based solely on 
the analytical results. In other words, the size standards of 70 
industries for which the analytical results, as presented in Table 4 of 
the November 2020 proposed rule, suggest raising them would be raised. 
However, the size standards of 63 industries or subindustries for which 
the analytical results suggest lowering them would be lowered. For the 
12 remaining industries or subindustries for which the analysis 
suggested no changes, size standards would be maintained at their 
current levels. Alternative Option Two would propose retaining size 
standards for all industries, given the uncertainty generated by the 
ongoing COVID-19 pandemic. Below, SBA discusses the benefits, costs, 
and net impacts of each option.

Alternative Option One: Adopting All Calculated Size Standards

    As discussed previously in the Alternatives Considered section of 
this final 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 benefit 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 the 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 have discussed already the benefits, costs, and transfer impacts 
of increasing 70 size standards. Below we discuss the benefits, costs, 
and transfer impacts of decreasing 63 size standards based on the 
analytical results.

Benefits of Decreasing Size Standards

    The most significant benefit to businesses from decreases to size 
standards when SBA's analysis suggests such decreases is to ensure that 
size standards are more reflective of latest industry structure and 
Federal market trends and that Federal small business assistance is 
more effectively targeted to its intended beneficiaries. These include 
SBA's 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, SDB, 8(a)/
BD, HUBZone, WOSB, EDWOSB, and SDVOSB programs. The adoption of 
calculated size standards diminishes the risk of awarding contracts to 
firms that are not small anymore.
    Decreasing size standards may reduce the administrative costs of 
the Federal Government, because the risk 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

    Table 6, Impacts of Decreasing Size Standards Under Alternative 
Option One, below, shows the various impacts of lowering size standards 
in 63 industries based solely on the analytical results. Based on the 
2012 Economic Census, about 1,700 (0.3%) firms would lose their small 
business status under Alternative Option One. Similarly, based on the 
FPDS-NG data for fiscal years 2018-2020, 169 (2.4%) 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 procurement programs. For 
example, during fiscal years 2018-2020, agencies awarded, on an annual 
basis, about $2.2 billion in small business contracts in those 63 
industries for which SBA considered decreasing size standards under 
Alternative Option One. Lowering size standards in 63 industries and 
subindustries would reduce Federal contract dollars awarded to small 
businesses by $110 million or about 5.0% relative to the baseline 
level.

[[Page 18657]]



                                       Table 6--Impacts of Decreasing Size Standards Under Alternative Option One
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Sector 61       Sector 62       Sector 71       Sector 72       Sector 81         Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
No. of industries for which SBA considered decreasing                  4              18              11               9              21              63
 size standards (2012 Economic Census)..................
Total current small businesses in industries for which            26,832         257,179          39,737         243,637         129,388         696,774
 SBA considered decreasing size standards (2012 Economic
 Census)................................................
Estimated no. of firms losing small status for which SBA              21             828             259             399             211           1,718
 considered decreasing size standards (2012 Economic
 Census)................................................
% of Firms losing small status relative to current small           0.08%           0.32%           0.65%           0.16%           0.16%           0.25%
 businesses in industries for which SBA considered
 decreasing size standards..............................
No. of current unique small firms getting small business             164           2,083             260           1,920           2,538           6,934
 contracts in industries for which SBA considered
 decreasing size standards (FPDS-NG FY2018-2020) \1\....
Estimated number of small business firms that would have               1              65               1              25              78             169
 lost small business status in the decreases that SBA
 considered \1\.........................................
% decrease to small business firms relative to current              0.6%            3.1%            0.4%            1.3%            3.1%            2.4%
 unique small firms getting small business contracts in
 industries for which SBA considered decreasing size
 standards (FPDS-NG FY2018-2020) \1\....................
Total small business contract dollars under current size            $232          $1,279             $19            $437            $245          $2,212
 standards in industries for which SBA considered
 decreasing size standards ($ million) (FPDS-NG FY2018-
 2020)..................................................
Estimated small business dollars not available to firms             $2.5           $88.2            $0.1            $4.8           $14.2          $109.8
 that would have lost business status (using avg.
 dollars obligated to SBs) ($ million) \1\ (FPDS-NG FY
 2018-2020) \2\.........................................
% decrease to small business dollars relative to total              1.1%            6.9%            0.5%            1.1%            5.8%            5.0%
 small business contract dollars under current size
 standards in industries for which SBA considered
 decreasing to size standards...........................
Total no. of 7(a) and 504 loans to small businesses in               371           2,066             507           4,035           1,687           8,666
 industries for which SBA considered decreasing size
 standards (FY 2018-2020)...............................
Total amount of 7(a) and 504 loans to small businesses            $163.4        $1,100.5          $342.3        $3,728.5          $605.4        $5,940.1
 in industries for which SBA considered decreasing size
 standards ($ million) (FY 2018-2020)...................
Estimated no. of 7(a) and 504 loans not available to                   1               7               4               7               3              22
 firms that would have lost small business status.......
Estimated 7(a) and 504 loan amounts not available to                $0.4            $3.7            $6.5            $6.5            $1.1           $18.2
 firms that would have small status ($ million).........
% decrease to 7(a)and 504 loan amounts relative to the              0.3%            0.3%            1.9%            0.2%            0.2%            0.3%
 total amount of 7(a) and 504 loans in industries for
 which SBA considered decreasing size standards.........
Total no. of EIDL loans to small businesses in                        15             124              42             130             102             413
 industries for which SBA considered decreasing size
 standards (FY 2018-2020)...............................
Total amount of EIDL loans to small businesses in                   $0.4            $8.2            $2.4            $6.1            $3.0           $20.2
 industries for which SBA considered decreasing size
 standards ($ million) (FY 2018-2020)...................
Estimated no. of EIDL loans not available to firms that                1               1               1               1               1               5
 would have lost small business status..................
Estimated EIDL loan amount not available to firms that             $0.03           $0.07           $0.06           $0.05           $0.03           $0.23
 would have lost small business status ($ million)......
% decrease to EIDL loan amount relative to the baseline.            6.7%            0.8%            2.4%            0.8%            1.0%            1.1%
--------------------------------------------------------------------------------------------------------------------------------------------------------
\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.


[[Page 18658]]

    Because of the importance of these sectors for the Federal 
procurement, SBA could adopt mitigating measures to reduce the negative 
impact under the assumptions of Alternative Option One. 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 are 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 Federal 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 goals. Additionally, impacted 
small businesses will be unable to compete for upcoming options as 
small businesses.
    As shown in Table 6, decreasing 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 about 22 of SBA's 
7(a) and 504 loans with total amounts of $18.2 million could not be 
made to those small businesses that would lose eligibility under the 
reduced size standards. That represents about 0.3% 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 7(a) and 504 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 program. However, SBA expects 
such impact to be minimal as only a small number of businesses in those 
industries received such loans during fiscal years 2018-2020. Because 
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 disaster loan data for fiscal years 2018-2020, 
SBA estimates that, under Alternative Option One, about five of EIDL 
loans with total amounts of $0.2 million could not be made to those 
small businesses that would lose eligibility under the reduced size 
standards. That represents about 1.1% decrease of the disaster loan 
amounts compared to the baseline (see Table 6).
    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 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 adopted increases to size standards, it would have no 
impact on the overall economic activity because the 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 businesses 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 
businesses qualifying as small under the decreases to size standards. 
With some larger small businesses losing small business status under 
the decreases to size standards, smaller small businesses would likely 
become more competitive in obtaining set-aside contracts. However, SBA 
cannot quantify these impacts.

Net Impacts of Alternative Option One

    To estimate the net impacts of Alternative Option One, SBA followed 
the same methodology used to evaluate the impacts of increasing size 
standards (see Table 5). However, under Alternative Option One, SBA 
used the calculated size standards instead of the adopted increases to 
determine the impacts of changes to current thresholds. The impact of 
the increases of size standards were already shown in Table 5 above. 
Table 6 and Table 7, Net Impacts of Size Standards Changes under 
Alternative Option One, present the impact of the decreases of size 
standards and the net impact of adopting the calculated results under 
Alternative Option One, respectively.
    Based on the 2012 Economic Census, SBA estimates that in 133 
industries in NAICS Sectors 61, 62, 71, 72, and 81 for which the 
analytical results suggested to change size standards, about 2,990 
firms would become small under Alternative Option One. That represents 
about 0.2% of all firms classified as small under the current size 
standards in these industries. That is about 1,710 fewer firms 
qualifying as small under Alternative Option One, which represents a 
36% reduction from about 4,700 firms that would qualify as small (see 
Table 5) under the proposal being adopted in this final rule (i.e., 
increasing 70 and retaining 75 size standards).

                                       Table 7--Net Impacts of Size Standards Changes Under Alternative Option One
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Sector 61       Sector 62       Sector 71       Sector 72       Sector 81         Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
No. of industries with changes to size standards........              17              36              22              13              44             132

[[Page 18659]]

 
Total no. of small business under the current size                80,620         607,466          87,630         486,936         557,798       1,820,450
 standards (2012 Economic Census).......................
Additional firms qualifying as small under size                      687             636               6             200           1,460           2,990
 standards (2012 Economic Census).......................
% of additional firms qualifying as small relative to              0.85%           0.10%           0.01%           0.04%           0.26%           0.16%
 total current small businesses.........................
No. of current unique small firms getting small business           2,772           4,839             556           2,607           5,292          15,778
 contracts (FPDS-NG FY2018-2020) \1\....................
Additional small firms getting small business status                  31             -35               8             -25              83              52
 (FPDS-NG FY2018-2020) \1\..............................
% increase to small firms relative to current unique                1.1%           -0.7%            1.4%           -1.0%            1.6%            0.3%
 small firms getting small business contracts (FPDS-NG
 FY2018-2020)...........................................
Total small business contract dollars under current size          $1,510          $2,347             $44            $448            $514          $4,864
 standards ($ million) (FPDS-NG FY2018-2020)............
Estimated small business dollars available to newly                $23.4          -$72.6            $2.1           -$4.8            $2.1          -$49.7
 qualified small firms ($ million) (FPDS-NG FY 2018-
 2020) \2\..............................................
% increase to dollars relative to total small business              1.6%           -3.1%            4.7%           -1.1%            0.4%           -1.0%
 contract dollars under current size standards..........
Total no. of 7(a) and 504 loans to small businesses (FY              872           5,248           2,030           7,838           5,362          21,350
 2018-2020).............................................
Total amount of 7(a) and 504 loans to small businesses              $365          $3,117          $1,045          $5,328          $2,421         $12,276
 (FY 2018-2020).........................................
Estimated no. of additional 7(a) and 504 loans to newly                6               5               4               3               7              25
 qualified small firms..................................
Estimated additional 7(a) and 504 loan amount to newly              $2.4            $4.2           -$2.7           -$2.3            $2.9            $4.4
 qualified small firms ($ million)......................
% increase to 7(a) and 504 loan amount relative to the              0.7%            0.1%           -0.3%            0.0%            0.1%           0.04%
 total amount of 7(a) and 504 loans to small businesses.
Total no. of EIDL loans to small businesses (FY 2018-                 51             317             101             298             337           1,104
 2020) \3\..............................................
Total amount of EIDL loans to small businesses (FY 2018-            $2.2           $20.2            $4.7           $16.2           $10.0           $53.3
 2020) \3\..............................................
Estimated no. of additional EIDL loans to newly                        0               0               0               0               0               0
 qualified small firms \3\..............................
Estimated additional EIDL loan amount to newly qualified           $0.02          -$0.01          -$0.01           $0.01           $0.00           $0.02
 small firms ($ million) \3\............................
% increase to EIDL loan amount relative to the total               0.85%          -0.02%          -0.24%           0.08%           0.01%           0.03%
 amount of EIDL loans to small businesses \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, in aggregate, 
SBA estimates that about 52 active firms in Federal contracting in 
those industries would gain small business status under Alternative 
Option One, most of them from Sector 81. This represents an increase of 
about 0.3% 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 $49.7 million of Federal procurement 
dollars would not be available to firms losing their small status. This 
represents a decrease of 1.0% from the baseline. A large amount of the 
losses is accounted for by Sector 62 (see Table 7).
    Based on the SBA's loan data for fiscal years 2018-2020, the total 
number of 7(a) and 504 loans will increase by 25 loans, while the total 
loan amount will increase by about $4.4 million. This represents a 
0.04% increase of the loan amounts relative to the group baseline.
    Firms' participation under the SBA's EIDL program will be affected 
as well. Because the benefit provided through

[[Page 18660]]

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 the total number of disaster loans will be unchanged, 
while the total loan amount will increase by about $.02 million. This 
represents a 0.03% increase of the loan amounts relative to the 
baseline.

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 70 and retaining 75 
size standards adopted in this final rule. Moreover, retaining all size 
standards under this option 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 firms 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 
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, if adopted, may have a significant impact on 
a substantial number of small businesses in the industries covered by 
this final rule. As described above, this final rule may affect small 
businesses seeking Federal contracts, loans under SBA's 7(a), 504, and 
EIDL programs, and assistance under other Federal small business 
programs.
    Immediately below, SBA sets forth a final regulatory flexibility 
analysis (FRFA) of this final rule addressing the following questions: 
(1) What is the need for and objective of the rule? (2) What is SBA's 
description and estimate of the number of small businesses to which the 
rule will apply? (3) What are the projected reporting, record keeping, 
and other compliance requirements of the rule? (4) What are the 
relevant Federal rules that may duplicate, overlap, or conflict with 
the rule, and (5) What alternatives will allow 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 the industries covered by this final 
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 size standards adopted in this final 
rule more appropriately reflect the size of businesses that need 
Federal assistance. The 2010 Jobs Act also requires SBA to review every 
five years all size standards and make necessary adjustments to reflect 
market conditions.
    2. What is SBA's description and estimate of the number of small 
businesses to which the rule will apply?
    Based on data from the 2012 Economic Census, SBA estimates that 
there are about 1,820,450 small firms covered by this rulemaking under 
industries with changes to size standards. Under this final rule, SBA 
estimates that an additional 2,990 businesses will be defined as small.
    3. What are the projected reporting, record keeping and other 
compliance requirements of the rule?
    The size standard changes in this final rule 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. Changes in small business size standards 
do not result in additional costs associated with SAM registration or 
certification. Changing size standards alters the access to SBA's 
programs that assist small businesses but does not impose a regulatory 
burden because they neither regulate nor control business behavior.
    4. What are the relevant Federal rules that may duplicate, overlap, 
or conflict with the rule?
    Under section 3(a)(2)(C) of the Small Business Act, 15 U.S.C. 
632(a)(2)(c), Federal agencies must use SBA's size standards to define 
a small business, unless specifically authorized by statute to do 
otherwise. In 1995, SBA published in the Federal Register a list of 
statutory and regulatory size standards that identified the application 
of SBA's size standards as well as other size standards used by Federal 
agencies (60 FR 57988 (November 24, 1995)). SBA is not aware of any 
Federal rule that would duplicate or conflict with establishing size 
standards.
    However, the Small Business Act and SBA's regulations allow Federal 
agencies to develop different size standards if they believe that SBA's 
size standards are not appropriate for their programs, with the 
approval of SBA's Administrator (13 CFR 121.903). The Regulatory 
Flexibility Act authorizes an agency to establish an alternative small 
business definition, after consultation with the Office of Advocacy of 
the U.S. Small Business Administration (5 U.S.C. 601(3)).
    5. What alternatives will allow SBA to accomplish its regulatory 
objectives while minimizing the impact on small entities?

[[Page 18661]]

    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 70 and 
maintaining 75 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 70 
industries for which the analytical results suggest raising size 
standards would be raised. However, the size standards of 63 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, particularly in Sector 62 (see Table 
6). 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 70 and decreasing 
63 size standards. SBA believes retaining all size standards at their 
current levels would be more onerous for small businesses than the 
option of increasing 70 and retaining 75 size standards. Postponing the 
adoption of the higher calculated size standards would be detrimental 
for otherwise small businesses 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 
final rule is consistent with section 6 of Executive Order 13563 and 
the 2010 Jobs Act, which requires SBA to review all size standards and 
make necessary adjustments to reflect market conditions. Specifically, 
the 2010 Jobs Act requires SBA to review at least one-third of all size 
standards during every 18-month period from the date of its enactment 
(September 27, 2010) and to review all size standards not less 
frequently than once every five years, thereafter. SBA had already 
launched a comprehensive review of size standards in 2007. In 
accordance with the Jobs Act, SBA completed the comprehensive review of 
the small business size standard for each industry, except those for 
agricultural enterprises previously set by Congress, and made 
appropriate adjustments to size standards for a number of industries to 
reflect current Federal and industry market conditions. The first 
comprehensive review was completed in 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. 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 final rule. SBA received a total of 12 comments to the proposed 
rule. In the Discussion of Comments section of this final rule, SBA 
summarizes and provides responses to the comments received on the 
proposed rule.

Executive Order 12988

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

Executive Order 13132

    For purposes of Executive Order 13132, SBA has determined that this 
final rule will not have substantial, direct effects on the States, on 
the relationship between the National Government and the States, or on 
the distribution of power and responsibilities among the various levels 
of government. Therefore, SBA has determined that this final rule has 
no federalism implications warranting preparation of a federalism 
assessment.

Paperwork Reduction Act

    For the purpose of the Paperwork Reduction Act, 44 U.S.C. Ch. 35, 
SBA has determined that this final rule 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 
694(a)(9); Pub. L. 116-136, Section 1114.


0
2. In Sec.  121.201, amend the table ``Small Business Size Standards by 
NAICS Industry'' by revising the entries for ``611110'', ``611210'', 
``611310'', ``611410'', ``611420'', ``611430'', ``611511'', ``611513'', 
``611519'', ``611519 (Exception)'', ``611630'', ``611691'', ``611692'', 
``611699'', ``611710'', ``621111'', ``621340'', ``621399'', ``621410'', 
``621491'', ``621498'', ``621511'', ``621910'', ``621999'', ``623312'', 
``623990'', ``624110'', ``624120'', ``624190'', ``624210'', ``624230'', 
``624310'', ``624410'', ``711120'', ``711130'', ``711219'', ``711320'', 
``711410'', ``712120'', ``712190'', ``713920'', ``713930'', ``713940'', 
``713950'', ``721211'', ``721310'', ``722511'', ``722515'', ``811122'', 
``811191'', ``811198'', ``811211'', ``811213'', ``811310'', ``812111'', 
``812112'', ``812191'', ``812210'', ``812310'', ``812320'', ``812921'', 
``812990'', ``813110'', ``813312'', ``813319'', ``813410'', ``813910'', 
``813920'', ``813930'', ``813940'', and ``813990'' to read as follows:


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

* * * * *

[[Page 18662]]



                                 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 61--Educational Services
                                       Subsector 611--Educational Services
----------------------------------------------------------------------------------------------------------------
611110.....................................  Elementary and Secondary Schools...           $17.5  ..............
611210.....................................  Junior Colleges....................            28.5  ..............
611310.....................................  Colleges, Universities and                     30.5  ..............
                                              Professional Schools.
611410.....................................  Business and Secretarial Schools...            18.0  ..............
611420.....................................  Computer Training..................            14.0  ..............
611430.....................................  Professional and Management                    13.0  ..............
                                              Development Training.
611511.....................................  Cosmetology and Barber Schools.....            11.5  ..............
 
                                                  * * * * * * *
611513.....................................  Apprenticeship Training............            10.0  ..............
611519.....................................  Other Technical and Trade Schools..            18.5  ..............
611519 (Exception).........................  Job Corps Centers \16\.............       \16\ 41.5  ..............
 
                                                  * * * * * * *
611630.....................................  Language Schools...................            18.0  ..............
611691.....................................  Exam Preparation and Tutoring......            11.0  ..............
611692.....................................  Automobile Driving Schools.........             9.0  ..............
611699.....................................  All Other Miscellaneous Schools and            14.5  ..............
                                              Instruction.
611710.....................................  Educational Support Services.......            21.0  ..............
----------------------------------------------------------------------------------------------------------------
                                  Sector 62--Health Care and Social Assistance
                                 Subsector 621--Ambulatory Health Care Services
----------------------------------------------------------------------------------------------------------------
621111.....................................  Offices of Physicians (except                  14.0  ..............
                                              Mental Health Specialists).
 
                                                  * * * * * * *
621340.....................................  Offices of Physical, Occupational              11.0  ..............
                                              and Speech Therapists and
                                              Audiologists.
 
                                                  * * * * * * *
621399.....................................  Offices of All Other Miscellaneous              9.0  ..............
                                              Health Practitioners.
621410.....................................  Family Planning Centers............            16.5  ..............
 
                                                  * * * * * * *
621491.....................................  HMO Medical Centers................            39.0  ..............
 
                                                  * * * * * * *
621498.....................................  All Other Outpatient Care Centers..            22.5  ..............
621511.....................................  Medical Laboratories...............            36.5  ..............
 
                                                  * * * * * * *
621910.....................................  Ambulance Services.................            20.0  ..............
 
                                                  * * * * * * *
621999.....................................  All Other Miscellaneous Ambulatory             18.0  ..............
                                              Health Care Services.
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
                             Subsector 623--Nursing and Residential Care Facilities
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
623312.....................................  Assisted Living Facilities for the             20.5  ..............
                                              Elderly.
623990.....................................  Other Residential Care Facilities..            14.0  ..............
----------------------------------------------------------------------------------------------------------------
                                        Subsector 624--Social Assistance
----------------------------------------------------------------------------------------------------------------
624110.....................................  Child and Youth Services...........            13.5  ..............
624120.....................................  Services for the Elderly and                   13.0  ..............
                                              Persons with Disabilities.
624190.....................................  Other Individual and Family                    14.0  ..............
                                              Services.
624210.....................................  Community Food Services............            17.0  ..............
 
                                                  * * * * * * *
624230.....................................  Emergency and Other Relief Services            36.5  ..............
624310.....................................  Vocational Rehabilitation Services.            13.0  ..............

[[Page 18663]]

 
624410.....................................  Child Day Care Services............             8.5  ..............
----------------------------------------------------------------------------------------------------------------
                                  Sector 71--Arts, Entertainment and Recreation
                     Subsector 711--Performing Arts, Spectator Sports and Related Industries
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
711120.....................................  Dance Companies....................            16.0  ..............
711130.....................................  Musical Groups and Artists.........            13.0  ..............
 
                                                  * * * * * * *
711219.....................................  Other Spectator Sports.............            14.5  ..............
 
                                                  * * * * * * *
711320.....................................  Promoters of Performing Arts,                  19.5  ..............
                                              Sports and Similar Events without
                                              Facilities.
711410.....................................  Agents and Managers for Artists,               15.5  ..............
                                              Athletes, Entertainers and Other
                                              Public Figures.
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
                        Subsector 712--Museums, Historical Sites and Similar Institutions
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
712120.....................................  Historical Sites...................            11.5  ..............
 
                                                  * * * * * * *
712190.....................................  Nature Parks and Other Similar                 17.0  ..............
                                              Institutions.
----------------------------------------------------------------------------------------------------------------
                          Subsector 713--Amusement, Gambling and Recreation Industries
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
713920.....................................  Skiing Facilities..................            31.0  ..............
713930.....................................  Marinas............................             9.5  ..............
713940.....................................  Fitness and Recreational Sports                15.5  ..............
                                              Centers.
713950.....................................  Bowling Centers....................            11.0  ..............
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
                                   Sector 72--Accommodation and Food Services
                                          Subsector 721--Accommodation
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
721211.....................................  RV (Recreational Vehicle) Parks and             9.0  ..............
                                              Campgrounds.
 
                                                  * * * * * * *
721310.....................................  Rooming and Boarding Houses,                   12.5  ..............
                                              Dormitories, and Workers' Camps.
----------------------------------------------------------------------------------------------------------------
                                Subsector 722--Food Services and Drinking Places
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
722511.....................................  Full-Service Restaurants...........            10.0  ..............
 
                                                  * * * * * * *
722515.....................................  Snack and Nonalcoholic Beverage                20.0
                                              Bars.
----------------------------------------------------------------------------------------------------------------
                                            Sector 81--Other Services
                                      Subsector 811--Repair and Maintenance
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
811122.....................................  Automotive Glass Replacement Shops.            15.5  ..............
811191.....................................  Automotive Oil Change and                       9.5  ..............
                                              Lubrication Shops.
 
                                                  * * * * * * *
811198.....................................  All Other Automotive Repair and                 9.0  ..............
                                              Maintenance.
811211.....................................  Consumer Electronics Repair and                22.5  ..............
                                              Maintenance.
 

[[Page 18664]]

 
                                                  * * * * * * *
811213.....................................  Communication Equipment Repair and             19.5  ..............
                                              Maintenance.
 
                                                  * * * * * * *
811310.....................................  Commercial and Industrial Machinery            11.0  ..............
                                              and Equipment (except Automotive
                                              and Electronic) Repair and
                                              Maintenance.
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
                                  Subsector 812--Personal and Laundry Services
----------------------------------------------------------------------------------------------------------------
812111.....................................  Barber Shops.......................             8.5  ..............
812112.....................................  Beauty Salons......................             8.5  ..............
 
                                                  * * * * * * *
812191.....................................  Diet and Weight Reducing Centers...            24.0  ..............
 
                                                  * * * * * * *
812210.....................................  Funeral Homes and Funeral Services.            11.0  ..............
 
                                                  * * * * * * *
812310.....................................  Coin[dash]Operated Laundries and               11.5  ..............
                                              Drycleaners.
812320.....................................  Dry cleaning and Laundry Services               7.0  ..............
                                              (except Coin[dash]Operated).
 
                                                  * * * * * * *
812921.....................................  Photofinishing Laboratories (except            26.0  ..............
                                              One[dash]Hour).
 
                                                  * * * * * * *
812990.....................................  All Other Personal Services........            13.0  ..............
----------------------------------------------------------------------------------------------------------------
              Subsector 813--Religious, Grantmaking, Civic, Professional and Similar Organizations
----------------------------------------------------------------------------------------------------------------
813110.....................................  Religious Organizations............            11.5  ..............
 
                                                  * * * * * * *
813312.....................................  Environment, Conservation and                  17.0  ..............
                                              Wildlife Organizations.
813319.....................................  Other Social Advocacy Organizations            16.0  ..............
813410.....................................  Civic and Social Organizations.....             8.5  ..............
813910.....................................  Business Associations..............            13.5  ..............
813920.....................................  Professional Organizations.........            20.5  ..............
813930.....................................  Labor Unions and Similar Labor                 14.5  ..............
                                              Organizations.
813940.....................................  Political Organizations............            12.5  ..............
813990.....................................  Other Similar Organizations (except            12.0  ..............
                                              Business, Professional, Labor, and
                                              Political Organizations).
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
Footnotes
 * * * * * * *
\16\ NAICS code 611519--Job Corps Centers. For classifying a Federal procurement, the purpose of the
  solicitation must be for the management and operation of a U.S. Department of Labor Job Corps Center. The
  activities involved include admissions activities, life skills training, educational activities, comprehensive
  career preparation activities, career development activities, career transition activities, as well as the
  management and support functions and services needed to operate and maintain the facility. For SBA assistance
  as a small business concern, other than for Federal Government procurements, a concern must be primarily
  engaged in providing the services to operate and maintain Federal Job Corps Centers.
 * * * * * * *


Isabella Casillas Guzman,
Administrator.
[FR Doc. 2022-06608 Filed 3-30-22; 8:45 am]
BILLING CODE 8026-03-P