Small Business Size Standards: Other Services Industries, 53941-53954 [E9-25199]
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change, competition among industries,
industry growth trends, and impacts on
SBA programs.
SBA conducts a statistical analysis of
data on the primary factors, and
secondary factors as appropriate, to
establish a size standard for a specific
industry. As a starting point, SBA
presumes $7.0 million as an appropriate
size standard for the services, retail
trade, construction, and other industries
with receipts based size standards; 500
employees for the manufacturing,
mining and other industries with
employee based size standards; and 100
employees for the wholesale trade
industries. These three levels, referred
to as ‘‘anchor size standards,’’ are not
minimum size standards, but rather
benchmarks or starting points. To the
extent an industry displays ‘‘differing
industry characteristics,’’ a size
standard higher, or in some cases lower,
than an anchor size standard is
supportable. ‘‘Size Standards
Methodology’’ includes an extensive
discussion of the statistical analyses
involved in size standards
determination.
SBA welcomes comments from the
public on a number of issues. SBA is
aware that different choices among size
standards can involve complex tradeoffs
among relevant variables; SBA invites
comments on how to identify and weigh
those variables. Suggestions are invited
on alternative methodologies for
determining small businesses; on how
these size standards affect competition
in general and within the specific
industry; on alternative or additional
factors that SBA should consider; on
whether SBA’s approach to small
business size standards makes sense in
the current economic environment; on
whether SBA’s using anchor size
standards is appropriate in the current
economy; on whether there are gaps in
SBA’s methodology because of the lack
of comprehensive data; and on
alternative datasets SBA should
consider for a specific sector.
The concluding section of ‘‘Size
Standards Methodology’’ raises a
number of policy questions that SBA
has to address in developing a robust
methodology for establishing, evaluating
and revising its small business size
standards. Examples include how high
of a size standard is too high? Should
there be a single basis for all size
standards (i.e., employees or annual
receipts)? Should there be a fixed
number of ‘‘bands’’ of size standards or
separate standard for each industry?
‘‘Size Standards Methodology’’ includes
several other issues, including some that
tend to be on-going questions.
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SBA encourages the public to review
‘‘Size Standards Methodology’’ and to
comment on it either in whole or in
part.
Dated: October 9, 2009.
Karen G. Mills,
Administrator.
[FR Doc. E9–25196 Filed 10–20–09; 8:45 am]
BILLING CODE 8025–01–P
SMALL BUSINESS ADMINISTRATION
13 CFR Part 121
RIN 3245–AF70
Small Business Size Standards: Other
Services Industries
AGENCY: U.S. Small Business
Administration.
ACTION: Proposed rule.
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submit confidential business
information (CBI) as defined in the User
Notice at www.regulations.gov, please
submit the information to U.S. Small
Business Administration, Khem R.
Sharma, Chief, Size Standards Division,
409 Third Street, SW., Mail Code 6530,
Washington, DC 20416, or send an email to sizestandards@sba.gov.
Highlight the information that you
consider to be CBI and explain why you
believe SBA should hold this
information as confidential. SBA will
review the information and make the
final determination of whether it will
publish the information or not.
FOR FURTHER INFORMATION CONTACT: Carl
J. Jordan, Program Analyst, Size
Standards Division, (202) 205–6618 or
sizestandards@sba.gov.
To
determine eligibility for Federal small
business assistance programs, SBA
establishes small business definitions
(referred to as size standards) for private
sector industries in the U.S. SBA’s
existing size standards use two primary
measures of business size—receipts and
number of employees. Financial assets,
electric output, and refining capacity are
used as size measures for a few
specialized industries. In addition,
SBA’s Small Business Investment
Company (SBIC) and the Certified
Development Company (CDC) Programs
determine small business eligibility
using either the industry based size
standards or net worth and net income
size standards. Currently, SBA’s size
standards consist of 45 different size
levels, covering 1,141 NAICS industries
and 17 sub-industry activities. Of these
size levels, 32 are based on average
annual receipts, eight are based on
number of employees, and five are
based on other measures. In addition,
SBA has established 11 other size
standards for its financial and
procurement programs.
Over the years, SBA has received
comments that its size standards have
not kept up with changes in the
economy and, in particular, that they do
not reflect the changes in the Federal
contracting marketplace. The last
overall review of size standards
occurred during the late 1970s to early
1980s. Since then, most reviews of size
standards have been limited to in-depth
analyses of specific industries in
response to requests from the public and
Federal agencies. SBA also makes
periodic inflation adjustments to its
monetary based size standards. The
latest inflation adjustment to size
standards was published in the Federal
Register on July 18, 2008 (73 FR 41237).
SUPPLEMENTARY INFORMATION:
SUMMARY: The U.S. Small Business
Administration (SBA) proposes to
increase the small business size
standards for 18 industries in North
American Industry Classification
System (NAICS) Sector 81, Other
Services, and retain the current
standards for the remaining 30
industries in the Sector. As part of its
ongoing initiative to review all size
standards, SBA has evaluated each
industry in Sector 81 to determine
whether the existing size standards
should be retained or revised. This
proposed rule is one of a series of
proposals that will examine industries
grouped by an NAICS Sector. As part of
this series of proposed rules SBA is
publishing concurrently in this issue of
the Federal Register a proposed rule to
modify small business size standards in
Sector 44–45, Retail Trade and, in
Sector 72, Accommodation and Food
Services. SBA has established its ‘‘Size
Standards Methodology’’ and published
elsewhere in this issue of the Federal
Register a notice of its availability on
SBA’s Web site at https://www.sba.gov/
size. SBA has applied ‘‘Size Standards
Methodology’’ to this proposed rule.
DATES: SBA must receive comments to
this proposed rule on or before
December 21, 2009.
ADDRESSES: You may submit comments,
identified by RIN 3245–AF70 by one of
the following methods: (1) Federal
eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments;
or (2) Mail/Hand Delivery/Courier:
Khem R. Sharma, Chief, Size Standards
Division, 409 Third Street, SW., Mail
Code 6530, Washington, DC 20416.
SBA will post all comments on
www.regulations.gov. If you wish to
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The evaluation of the size standards
in the Other Services is also necessary
to account for changes in the industry
classification. The development of
NAICS in 1997 included significant
changes in the definition of industries
compared to the earlier Standard
Industrial Classification (SIC) system.
The NAICS update used in the 2002
Economic Census included further
changes in industry definitions from the
1997 NAICS used in the 1997 Economic
Census. These changes in the industry
classification have led SBA to evaluate
if the existing size standards for the
Other Services industries are
appropriate. Most of the size standards
for industries in Sector 81, Other
Services, have not been reviewed since
the 1980s, and many have not been
changed since the 1960s, except for
periodic adjustments for inflation.
SBA recognizes that industrial
changes over time have rendered
existing size standards for some
industries no longer supportable by
current data. Accordingly, SBA has
begun a comprehensive review of its
size standards to ensure that existing
size standards have supportable bases
and, where necessary, to make revisions
to current size standards. This proposed
rule affords the public an opportunity to
review and comment on the data and
methodology SBA uses to evaluate and
revise a size standard.
Rather than review all size standards
at one time, SBA believes that a more
manageable approach would be to
examine a group of related industries
within an NAICS Sector in phases.
Except for manufacturing, an NAICS
Sector generally consists of 25 to 75
industries. Once a review of size
standards for industries within an
NAICS Sector is completed, SBA will
issue a proposed rule for those
industries in which the analysis of
industry data supports a change to the
existing size standards. SBA expects to
complete a review of all NAICS Sectors
in two years.
Below is a discussion of SBA’s size
standards methodology, including
analyses of industry structure, Federal
procurement trends and other factors for
industries within Sector 81, Other
Services, and the impact of the
proposed revisions to size standards on
Federal small businesses assistance.
Size Standards Methodology
SBA has recently developed a ‘‘Size
Standards Methodology’’ that it uses for
developing and modifying size
standards when necessary. SBA has
published the document which is
available at https://www.sba.gov/size.
SBA does not apply all features of its
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‘‘Size Standards Methodology’’ to all
cases because not all are appropriate.
However, SBA does make it available in
its entirety for parties with an interest
in SBA’s overall approach to evaluating,
establishing and modifying small
business size standards. SBA always
explains its analysis in the proposed
and final rules that relate to size
standards for specific industries. The
following discussion is of SBA’s size
standard analysis applied to industries
in Sector 81, Other Services.
SBA welcomes comments from the
public on a number of issues. SBA is
aware that different choices among size
standards can involve complex tradeoffs
among relevant variables; SBA invites
comments on how to identify and weigh
those variables. Suggestions are invited
on alternative methodologies for
determining small businesses; on how
these size standards affect competition
in general and within the specific
industry; on alternative or additional
factors that SBA should consider; on
whether SBA’s approach to small
business size standards makes sense in
the current economic environment; on
whether SBA’s using anchor size
standards is appropriate in the current
economy; on whether there are gaps in
SBA’s methodology because of the lack
of comprehensive data; and on
alternative datasets SBA should
consider for a specific sector.
Congress granted SBA’s Administrator
discretion to establish detailed small
business size standards (15 U.S.C.
632(a)(2)). Section 3(a)(3) of the Small
Business Act (15 U.S.C. 632 (a)(3))
requires that size standards vary by
industry to the extent necessary to
reflect differing characteristics among
various industries. Accordingly, the
economic structure of an industry serves
as the underlying basis for developing
and modifying small business size
standards. By examining data on
economic characteristics defining the
industry structure (as described below),
the small business segment of an
industry is identified. In addition to the
industry structure, SBA also takes into
consideration its program objectives and
whether a size standard successfully
excludes businesses that are dominant
in the industry. Discussed below is
SBA’s analysis of the economic
characteristics of each industry in
Sector 81, Other Services, the impact of
proposed size standards on SBA
programs, and the evaluation of whether
a revised size standard would exclude
dominant firms in the industry from
being considered as small.
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Industry Analysis
For the current comprehensive size
review, SBA has established three
‘‘base’’ or ‘‘anchor’’ size standards that
apply to most industries—$7.0 million
in average annual receipts for industries
that have receipts based size standards,
500 employees for manufacturing and
other industries that have employee
based size standards (except for
Wholesale Trade), and 100 employees
for industries in the Wholesale Trade
Sector. SBA established 500 employees
as the anchor size standard for the
manufacturing industries at SBA’s
inception in 1953 and shortly thereafter
established a receipts based anchor size
standard of $1 million in average annual
receipts for the nonmanufacturing
industries. The receipts based anchor
size standard has been adjusted
periodically for inflation. The inflation
adjustment over the years has increased
it to $7.0 million today. Since 1986, all
industries in the Wholesale Trade
Sector have had the 100-employee size
standard for all non-procurement SBA
programs. For procurement purposes,
the size standard for a non-manufacturer
is 500 employees.
These long-standing anchor size
standards have gained legitimacy
through practice and general public
acceptance. An anchor size standard is
neither a minimum nor a maximum size
standard. It is a common size standard
for a large number of industries that
have similar economic characteristics
and serves as a reference point in
evaluating size standards for individual
industries. SBA uses the anchor in lieu
of trying to establish precise small
business size standards for each
industry. Otherwise, theoretically, that
could require that the number of size
standards be as high as the number of
industries for which SBA establishes
size standards. SBA presumes an anchor
size standard is appropriate size
standard for a particular industry unless
that industry displays significantly
different economic characteristics, as
compared to the characteristics of
industries with the anchor size
standard, thereby suggesting a need for
revision to an existing size standard.
When evaluating a size standard, the
economic characteristics of a specific
industry under review are compared to
the average characteristics of industries
with one of the three anchor size
standards (referred to as ‘‘anchor
comparison group’’) to assess industry
structure and to determine whether the
industry displays significant differences
relative to the industries in the anchor
size standard group. If the
characteristics of a specific industry
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under review are similar to the average
characteristics of the anchor comparison
group, the anchor size standard would
be considered appropriate for that
industry. SBA will consider adopting a
size standard below the anchor size
standard only when (1) all or most of
the industry characteristics are
significantly smaller than the average
characteristics of the anchor comparison
group, or (2) other industry
considerations strongly suggest that the
anchor size standard would be an
unreasonably high size standard for the
industry.
If the specific industry’s
characteristics are significantly higher
than those of the anchor comparison
group, a size standard higher than the
anchor size standard may be considered
appropriate. The larger the differences
are between the characteristics of the
industry under review and those in the
anchor comparison group, the larger
will be the difference between the
appropriate industry size standard and
the anchor size standard. To determine
the level of a size standard above the
anchor size standard, the characteristics
of a second comparison group are
analyzed. For industries with receipts
based size standards, SBA has
developed a second comparison group
consisting of industries with the highest
levels of receipts based size standards.
The size standards for this group of
industries range from $23 million to
$35.5 million in average receipts, with
the weighted average size standard for
the group equaling $29 million. SBA
refers to this comparison group as the
‘‘higher level receipts based size
standard group.’’
The primary factors that SBA
evaluates in analyzing the structural
characteristics of an industry include
average firm size, startup costs and
entry barriers, industry competition,
and distribution of firms by size (13 CFR
121.102(a) and (b)). SBA also evaluates
the possible impact of both existing and
revised size standards on Federal
contracting assistance to small
businesses as an additional primary
factor. SBA generally considers these
five factors as the most important ones
for establishing or revising a size
standard for an industry. However, SBA
will also consider and evaluate other
information that it believes relevant to
the decision on a size standard for a
particular industry (such as
technological changes, growth trends,
SBA financial assistance and other
program factors, etc.). Public comments
on a proposed size standard rule also
provide important additional
information. SBA thoroughly reviews all
public comments before making a final
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decision on its proposed size standard.
Below is a brief description of each of
the five primary evaluation factors. A
more detailed description of this
analysis is provided in the ‘‘SBA Size
Standards Methodology’’ paper which is
available at https://www.sba.gov/size.
1. Average firm size. SBA computes
two measures of average firm size:
simple average firm size and weighted
average firm size. For industries with
receipts based standards (including
Other Services industries), the simple
average firm size is calculated as total
receipts of an industry divided by the
total number of firms in that industry.
The weighted average firm size is
computed as the sum of weighted
simple average firm size in different
receipts size classes where weights are
the shares of total industry receipts for
respective size classes. The simple
average firm size weighs all firms within
an industry equally regardless of their
size. The weighted average overcomes
that limitation by giving more weights
to larger firms.
If the average firm size of an industry
under review is significantly higher
than the average firm size of industries
in the anchor comparison industry
group, this would generally support a
size standard higher than the anchor
size standard. Conversely, if the
industry’s average firm size is similar to
or significantly lower than that of the
anchor comparison industry group, it
would be a basis to adopt the anchor
size standard or, in rare cases, a
standard lower than the anchor.
2. Startup costs. Startup costs reflect
a firm’s initial size in an industry. New
entrants to an industry must have
sufficient capital to start and maintain a
viable business. If firms entering a
particular industry have greater capital
requirements than firms do in industries
in the anchor comparison group, this
will form a basis for establishing a size
standard higher than the anchor
standard. In lieu of data on actual
startup costs, SBA uses average assets
size as a proxy measure to assess the
levels of capital requirements for new
entrants to an industry.
SBA calculates the average assets size
within a particular industry by applying
the sales to total assets ratios from the
Risk Management Association’s Annual
Statement Studies, 2006–2008 to the
average receipts size of firms in that
industry. An industry with a
significantly higher level of average
assets size than that of the anchor
comparison group is likely to have
higher startup costs, which would
support a size standard higher than the
anchor size standard. Conversely, if the
industry has a significantly smaller
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average assets size compared to the
anchor comparison group, the anchor
size standard, or in rare cases one lower
than the anchor, would be considered
appropriate.
3. Industry competition. Industry
competition is generally assessed by
measuring the share of total industry
receipts obtained by firms that are
among the largest in an industry. In this
proposed rule, SBA evaluates the share
of industry receipts generated by the
four largest firms in the industry. This
is referred to as the ‘‘four-firm
concentration ratio.’’ SBA then
compares the four-firm concentration
ratio for an industry under review to the
average four-firm concentration ratio for
industries in the anchor comparison
group. If a significant share of economic
activity within the industry is
concentrated among a few relatively
large companies, SBA would establish a
size standard relatively higher than the
anchor size standard. SBA would not
consider the four-firm concentration
ratio as an important factor in assessing
a size standard if its value for an
industry under review is less than 40
percent. For industries in which the
four largest firms account for 40 percent
or more of an industry’s total receipts,
SBA examines the average size of the
four largest firms in determining a size
standard.
4. Distribution of firms by size. SBA
examines the shares of industry total
receipts accounted for by firms of
different receipts and employment size
classes in an industry. This is an
additional factor SBA evaluates in
assessing competition within an
industry. If the preponderance of an
industry’s economic activity is
attributable to smaller firms, this would
indicate that small businesses are
competitive in that industry and
supports adopting the anchor size
standard. A size standard higher than
the anchor size standard would be
supported for an industry in which the
distribution of firms indicates that most
of the economic activity is concentrated
among the larger firms.
Concentration among firms is a
measure of inequality of distribution. To
evaluate the degree of inequality of
distribution within an industry, SBA
computes the Gini coefficient by
constructing the Lorenz curve. The Gini
coefficient values vary between zero and
one. If receipts are distributed perfectly
equally among all the firms in an
industry, the value of the Gini
coefficient would equal to zero. If an
industry’s total receipts are attributed to
a single firm, the Gini coefficient would
equal to one.
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SBA compares the degree of
inequality of distribution for an industry
under review with that for industries in
the anchor comparison group. If an
industry shows a higher degree of
inequality of distribution (i.e., higher
Gini coefficient) compared to industries
in the anchor comparison industry
group this would, all else being equal,
warrant a higher size standard than the
anchor. Conversely, for industries with
similar or more equal distribution (i.e.,
similar or lower Gini coefficient values)
than the anchor group, the anchor
standard, or in some cases a standard
lower than the anchor, would be
adopted.
5. Impact on SBA programs. SBA
examines the possible impact a size
standard change may have on the level
of Federal small business assistance.
This assessment most often focuses on
the share of Federal contracting dollars
awarded to small businesses in the
industry in question. In general, if the
share of Federal contracting dollars
awarded to small businesses in an
industry that receives a significant
amount of Federal contracting dollars is
significantly less than the small
business share of the industry’s total
receipts, a justification would exist for
considering a size standard higher than
the existing size standard. The disparity
between the small business Federal
market share and industry-wide share
may be attributed to a variety of reasons,
such as extensive administrative and
compliance requirements associated
with Federal contracts, the different
skill set required on Federal contracts as
compared to typical commercial
contracting work, and the size of
contracting requirements of Federal
customers. These, as well as other
factors, are likely to influence the type
of firms within an industry that compete
for Federal contracts and, hence, the
firms receiving such contracts are
expected to possess different
characteristics than the average
characteristics for all firms in that
industry. By comparing the small
business Federal contracting share with
the industry-wide small business share,
SBA includes in its size standards
analysis the latest Federal contracting
trends. This analysis may indicate a size
standard larger than the current
standard.
For this proposed rule, SBA
considered Federal procurement trends
in the size standards analysis only if (1)
the small business share of Federal
contracting dollars is at least 10
percentage points lower than the small
business share of total industry receipts
and (2) the amount of total Federal
contracting averages $100 million or
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more during fiscal years 2006–2008 (the
latest years for which complete Federal
procurement data are available). SBA
has selected these thresholds because
they reflect a significant level of
contracting in which a revision to a size
standard may have an impact on
expanding small business opportunities.
Another factor that SBA evaluates is
the impact of a proposed size standard
on SBA’s loan programs, that is, the
volume of SBA guaranteed loans within
an industry and the size of firms
obtaining those loans. This factor is
examined to assess whether the existing
or the proposed size standard for a
particular industry may be restricting
the level of financial assistance to small
firms in that industry. If the analysis
shows a reduction in financial
assistance to small businesses, a higher
size standard would be supportable. If
small businesses have already been
receiving significant amounts of
financial assistance through SBA’s loan
programs, or if the financial assistance
has been provided mainly to businesses
that are much smaller in size than the
existing size standard, consideration of
this factor for determining the size
standard may not be necessary.
Sources of Industry and Program Data
The primary source of data for SBA’s
industry analysis is a special tabulation
of the 2002 Economic Census (see
https://www.census.gov/econ/census02/)
prepared by the U.S. Bureau of the
Census (Census Bureau) for SBA. The
special tabulation provides SBA with
industry-specific data on the number of
firms, number of establishments,
number of employees, annual payroll
and annual receipts of companies by the
size of firm reporting the data to Census.
That is, the data are by the size class of
the total company; however, the data
itself, within a particular size class,
represents the company’s total data in
that industry only. The special
tabulation enables SBA to evaluate
average firm size, the four-firm
concentration ratio, and distribution of
firms by receipts and employment size.
In some cases, where Census data
were not available due to disclosure
prohibitions, SBA either estimated
missing values using available relevant
data or, examined data at a higher level
of industry aggregation, such as at the 2or 3-digit NAICS level. In some
instances, SBA had to base its analysis
only on those factors for which data
were available or missing values could
be estimated. Data sources and
estimation procedures SBA uses in its
size standards analysis are documented
in detail in the ‘‘SBA Size Standards
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Methodology’’ paper, which is available
at https://www.sba.gov/size.
Sales to total assets ratios used to
calculate average assets size are from the
Risk Management Association’s Annual
Statement Studies, 2006–2008.
To evaluate Federal contracting
trends, SBA examined Federal contract
award data for fiscal years 2006–2008
from the U.S. General Service
Administration’s Federal Procurement
Data System—Next Generation (FPDS–
NG). SBA’s internal data on its
guaranteed loan programs for fiscal
years 2006–2008 were analyzed to
assess the impact on financial assistance
to small businesses.
Dominant in Field of Operation
Section 3(a) of the Small Business Act
(15 U.S.C. 632(c)) defines a small
business concern as one that is (1)
independently owned and operated, (2)
not dominant in its field of operation,
and (3) within a specific small business
definition or size standard established
by the SBA Administrator. SBA
considers as part of its evaluation of a
size standard whether a business
concern at a proposed size standard
would be considered dominant in its
field of operation. For this, SBA
generally examines the industry’s
market share of firms at the proposed
standard or other factors that may
indicate whether a firm can exercise a
major controlling influence on a
national basis in which significant
numbers of business concerns are
engaged. If SBA’s analysis indicates that
a proposed size standard would include
a dominant firm, a lower size standard
would be considered to exclude the
dominant firm from being defined as
small.
Selection of Size Standards
To simplify size standards, for the
ongoing comprehensive size standards
review, SBA has proposed to select a
size standard for an industry from a
limited number of receipts based size
standard levels. For many years, SBA
has been concerned about the
complexity of determining small
business status caused by a large
number of varying receipts based size
standards (see 69 FR 13130, March 4,
2004, and 57 FR 62515, December 31,
1992). Currently, there are 32 different
levels of receipts based size standards,
ranging from $0.75 million to $35.5
million, with many of those levels
applying to one or just a few industries
only. SBA believes that such a large
number of variations with small
variations are both unnecessary and
difficult to justify analytically.
Simplifying the administration of SBA’s
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size standards to a fewer number of size
standard levels will produce more
common size standards for businesses
operating in multiple related industries
and greater consistency in the size
standards among industries that are
similar in their economic
characteristics.
This proposed rule, therefore, applies
one of eight receipts based size
standards to each industry in Sector 81,
Other Services. These eight ‘‘fixed’’ size
standard levels are $5 million, $7
million, $10 million, $14 million, $19
million, $25.5 million, $30.0 million
and $35.5 million. These eight receipts
based size standard levels are
established by taking into consideration
the minimum, maximum, and the more
commonly used receipts based size
standards. Currently, the more
commonly used receipts based size
standards cluster around the following
six levels –$2.5 million to $4.5 million,
$7 million, $9.0 million to $10 million,
$12.5 million to $14.0 million, $25.0
million to $25.5 million, and $33.5
million to $35.5 million. SBA has
selected $7 million as one of eight fixed
levels of receipts based size standards
because this is also an anchor standard
for receipts based standards. A lower or
minimum receipts based size level is
established at $5 million. Excluding
monetary standards for agriculture and
those based on net commissions (such
as real estate brokers and travel agents),
$5 million is in the close neighborhood
of the current minimum receipts based
standard of $4.5 million. Among the
higher levels size clusters, $10 million,
$14 million, $25.5 million, and $35.5
million are selected as other four levels
of the fixed size standards. Because of
a large gap between two of the size
standard intervals, SBA has established
intermediate levels of $19 million
between $14 million and $25.5 million,
and $30 million between $25.5 million
and $35.5 million. These two
intermediate size levels reflect roughly
similar proportional differences
between the two successive size
standard levels.
In a further effort to simplify size
standards, SBA may propose a common
size standard for certain closely related
group of industries. Although the size
standard analysis may support a specific
size standard level for each industry,
SBA believes that establishing different
size standards for closely related
industries may not be appropriate. For
example, in cases where many of the
same businesses operate in the same
two industries, establishing the common
size standard would better reflect the
industry marketplace than establishing
separate size standards for each of those
industries. This situation has led SBA to
establish a common size standard for
the information technology (IT) services
industries (NAICS 541511, NAICS
541112, NAICS 541513 and NAICS
541519), even though the industry data
might support a distinct size standard
for each industry. Businesses engaged in
IT related services typically perform
activities in two or more other related
industries. Consequently, SBA has
continued to use a common size
standard for Computer and Office
Machine Repair Maintenance industry
in the Other Services Sector (NAICS
811211) and Computer Systems Design
and Related Services sector (NAICS
541511–541519). Whenever SBA
proposes a common size standard for
closely related industries it will provide
a justification for that in the proposed
rule.
Evaluation of Industry Structure
SBA has evaluated the structure of
each industry in the Other Services
Sector to assess the appropriateness of
the current size standards. As described
above, SBA compared data on the
economic characteristics of each
industry in that Sector to the average
characteristics of industries in two
comparison groups. The first
comparison group is comprised of all
industries with $7.0 million size
standards—referred to as the ‘‘receipts
53945
based anchor comparison group.’’
Because the goal of SBA’s size review is
to assess whether a specific industry’s
size standard should be at or different
from the anchor size standard, this is
the most logical set of industries to
group together for the industry analysis.
In addition, this group includes a
sufficient number of firms to provide a
meaningful assessment and comparison
of industry characteristics.
If the characteristics of an industry
under review are similar to the average
characteristics of industries in the
anchor comparison group, the anchor
size standard would be considered an
appropriate standard for that industry. If
an individual industry’s structure is
significantly different from that of the
anchor group, a size standard lower or
higher than the anchor size standard
would be selected. The level of the new
size standard is determined based on
the difference between the
characteristics of the anchor comparison
group and a second industry
comparison group. As described above,
the second comparison group for
receipts based standards consists of
industries with the highest receipts
based size standards, ranging from $23
million to $35.5 million, with the
average size standard for the group
equaling $29 million. SBA refers to this
group of industries as the ‘‘higher level
receipts based size standard comparison
group.’’ Differences in industry
structure between an industry under
review and the industries in the two
comparison groups are determined by
comparing data on each of the industry
factors, including average firm size,
average assets size, four-firm
concentration ratio, and the Gini
coefficient of distribution of firms by
size. Table 1 shows two measures of the
average firm size (simple and weighted),
average assets size, four-firm
concentration ratio, average receipts of
the four largest firms, and the Gini
coefficient for both anchor level and
higher level comparison groups for
receipts based size standards.
TABLE 1—AVERAGE CHARACTERISTICS OF RECEIPTS BASED COMPARISON GROUPS
Avg. firm size
($ million)
Receipts based comparison group
pwalker on DSK8KYBLC1PROD with PROPOSALS
Simple
Average
Anchor Level ............................................................
Higher Level .............................................................
a To
1.19
4.77
Weighted
Average
Avg. assets
size
($ million)
17.64
52.27
Avg. four-firm
concentration
ratio (%)
0.71
2.05
18.7
22.3
be used for industries with a four-firm concentration ratio of 40% or greater.
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Avg. receipts of
four largest
firms
($ million) a
189.9
639.4
Gini coefficient
0.599
0.725
53946
Federal Register / Vol. 74, No. 202 / Wednesday, October 21, 2009 / Proposed Rules
Derivation of Size Standards Based on
Industry Factors
For each of the industry factors shown
in Table 1, SBA derives a separate size
standard based on the amount of
differences between their values for an
industry under review and those for the
two comparison groups. An estimated
size standard that is supported by each
industry factor is derived by comparing
its value for a specific industry under
review to the corresponding value for
the two comparison groups. If the
industry value for a particular factor is
near that for the anchor comparison
group, the $7.0 million anchor size
standard would be considered
appropriate for that factor.
If an industry’s value for a factor is
significantly above or below the anchor
comparison group value, a size standard
above or below the $7.0 million anchor
size would be warranted. The level of
the new size standard in these cases is
derived based on the proportional
difference between the industry value
and the values for the two comparison
groups.
For example, if an industry’s simple
average receipts size equals $3.0
million, SBA’s analysis would support a
size standard of $19 million. The $3.0
million level is 50.6 percent between
the average firm size of $1.19 million for
the anchor comparison group and $4.77
million for the higher level comparison
group (($3.00 million ¥ $1.19 million)
÷ ($4.77 million ¥ $1.19 million) =
0.506 or 50.6%). This proportional
difference is applied to the difference
between the $7.0 million anchor size
standard and average size standard of
$29 million for the higher level size
standard group and then added to $7.0
million to estimate a size standard of
$18.12 million ([{$29.0 million ¥ $7.0
million} * 0.506] + $7.0 million =
$18.12 million). The final step rounds
the estimated size standard of $18.12
million to the nearest fixed size
standard level, in this case to $19
million.
SBA applies the above method of
calculation to derive a size standard for
each industry factor. Detailed formulas
involved in these calculations are
presented in ‘‘SBA Size Standards
Methodology’’ which is available at
https://www.sba.gov/size. Table 2 shows
ranges of values for each industry factor
and the levels of size standards
supported by those values.
TABLE 2—VALUES OF INDUSTRY FACTORS AND SUPPORTED SIZE STANDARDS
Or if weighted avg.
receipts size
($ million)
If simple avg. receipts size
($ million)
<1.03 ............................................
1.03 to1.43 ...................................
1.44 to 2.00 ..................................
2.01 to 2.74 ..................................
2.75 to 3.67 ..................................
3.68 to 4.57 ..................................
4.58 to 5.38 ..................................
>5.38 ............................................
16.07
20.01
25.52
32.60
41.66
50.31
Table 3 shows the results of analyses
of industry data and latest Federal
contracting trends for each industry in
Sector 81, Other Services. Each NAICS
industry row in columns 2, 3, 4, 6, 7,
and 8 shows two numbers. The upper
number is the value for the industry
factor shown on the top of the column,
while the lower number is the size
standard supported by that factor. For
the four-firm concentration ratio, a size
standard is estimated based on the
average receipts of the top four firms if
its value is 40 percent or more. If the
four-firm concentration ratio for an
Or if avg. assets
size
($ million)
<16.07
to 20.00
to 25.51
to 32.59
to 41.65
to 50.30
to 58.17
>58.17
0.65
0.81
1.03
1.30
1.65
1.98
Or if avg. receipts
of largest four firms
($ million)
<0.65
to 0.80
to 1.02
to 1.29
to 1.64
to 1.97
to 2.28
>2.28
169.4
220.6
292.1
384.1
501.6
613.9
Or if Gini coefficient
Then size standard
is
($ million)
<0.593
to 0.608
to 0.628
to 0.653
to 0.686
to 0.718
to 0.746
>0.746
5.0
7.0
10.0
14.0
19.0
25.5
30.0
35.5
<169.4
to 220.5
to 292.0
to 384.0
to 501.5
to 613.8
to 716.1
>716.1
industry is less than 40 percent, no size
standard is estimated for that factor and
column 5 is left blank. The value for
Federal contracting factor in column 8
is shown only for industries that
averaged $100 million or more annually
in Federal contracting dollars during
fiscal years 2006–2008. A size standard
for that factor is derived only if the
small business share of total Federal
contracting dollars is 10 percentage
points less than the small business share
of industry’s total receipts. Otherwise
column 8 is also left blank. Column 9
shows the proposed or revised size
0.593
0.609
0.629
0.654
0.687
0.719
standard for each industry in the Other
Services Sector, calculated as the
average of size standards supported by
each industry factor and rounded to the
nearest fixed size level. Analytical
details involved in the averaging
procedure are described in the SBA
‘‘Size Standards Methodology’’ paper
which is available at https://
www.sba.gov/size. For comparison, the
current size standards for industries in
Sector 81 are also shown in column 10
of Table 3.
TABLE 3—SIZE STANDARDS SUPPORTED BY EACH INDUSTRY FACTOR
[In millions of dollars]
(2)
Simple average firm
size
pwalker on DSK8KYBLC1PROD with PROPOSALS
(1)
NAICS
(3)
Weighted
average
firm size
$0.4
$5.0
$0.4
$1.3
$5.0
$1.4
$5.0
$0.4
$5.0
$0.4
$5.0
$1.0
$5.0
$2.0
811111 .......................................
General Automotive Repair .......
811112 .......................................
Automotive Exhaust System Repair ..........................................
811113 .......................................
Automotive Transmission Repair
811118 .......................................
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assets
size
Frm 00054
(5)
Four-firm
ratio
(%)
(6)
Four-firm
average
size
(7)
Gini coefficient
(8)
Federal
contract
factor (%)
(9)
Revised
size
standard
(10)
Current
size
standard
$0.1
$5.0
$0.1
1.9
................
4.6
$150.8
................
$14.3
0.154
$5.0
0.142
................
................
................
$5.0
................
$5.0
$7.0
................
$7.0
$5.0
................
................
................
................
$5.0
................
$7.0
$0.1
5.8
$39.5
$5.0
0.066
$5.0
0.210
¥86.6
$7.0
$7.0
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53947
Federal Register / Vol. 74, No. 202 / Wednesday, October 21, 2009 / Proposed Rules
TABLE 3—SIZE STANDARDS SUPPORTED BY EACH INDUSTRY FACTOR—Continued
[In millions of dollars]
(2)
Simple average firm
size
pwalker on DSK8KYBLC1PROD with PROPOSALS
(1)
NAICS
Other Automotive Mechanical
and Electrical Repair and
Maintenance ...........................
811121 .......................................
Automotive Body, Paint, and Interior Repair and Maintenance
811122 .......................................
Automotive Glass Replacement
Shops .....................................
811191 .......................................
Automotive Oil Change and Lubrication Shops .......................
811192 .......................................
Car Washes ...............................
811198 .......................................
All Other Automotive Repair and
Maintenance ...........................
811211 .......................................
Consumer Electronics Repair
and Maintenance ....................
811212 .......................................
Computer and Office Machine
Repair and Maintenance ........
811213 .......................................
Communication Equipment Repair and Maintenance .............
811219 .......................................
Other Electronic and Precision
Equipment Repair and Maintenance ......................................
811310 .......................................
Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance ......................................
811411 .......................................
Home and Garden Equipment
Repair and Maintenance ........
811412 .......................................
Appliance Repair and Maintenance ......................................
811420 .......................................
Reupholstery and Furniture Repair ..........................................
811430 .......................................
Footwear and Leather Goods
Repair .....................................
811490 .......................................
Other Personal and Household
Goods Repair and Maintenance ......................................
812111 .......................................
Barber Shops .............................
812112 .......................................
Beauty Salons ............................
812113 .......................................
Nail Salons .................................
812191 .......................................
Diet and Weight Reducing Centers ..........................................
812199 .......................................
Other Personal Care Services ...
812210 .......................................
Funeral Homes and Funeral
Services ..................................
812220 .......................................
Cemeteries and Crematories .....
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(3)
Weighted
average
firm size
$5.0
$0.7
$5.0
$2.3
$5.0
$0.8
(5)
Four-firm
ratio
(%)
(6)
Four-firm
average
size
(7)
Gini coefficient
(8)
Federal
contract
factor (%)
$5.0
$0.2
$142.2
$5.0
0.252
$14.0
2.5
$5.0
$51.3
$5.0
$0.3
27.6
$260.8
$5.0
$0.8
$30.0
$13.2
$5.0
17.3
$5.0
$0.4
$5.0
$0.7
$5.0
$2.0
$5.0
$11.8
$0.5
$5.0
$0.2
$5.0
$0.4
$5.0
$6.9
$5.0
$5.0
$1.2
$5.0
$18.1
$0.4
$7.0
$1.3
$7.0
$11.5
$5.0
$7.0
$1.9
$5.0
$30.6
$0.8
23.8
42.4
$10.0
$0.8
$14.0
$6.5
$7.0
$0.3
$5.0
$0.3
$5.0
$0.6
$5.0
$5.0
$0.8
$5.0
$52.4
$0.2
$5.0
$0.2
$30.0
$0.7
$5.0
$5.0
$0.1
$5.0
$0.5
$5.0
$0.3
$5.0
$1.6
$5.0
$0.1
$5.0
$0.2
$5.0
$0.1
$5.0
$1.3
$5.0
$7.7
$5.0
$23.0
$10.0
$0.3
$5.0
$101.0
$7.0
$0.2
$5.0
$1.0
$35.5
$1.8
$5.0
$48.9
$5.0
$0.7
$5.0
$25.5
$54.8
$30.0
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assets
size
Frm 00055
(9)
Revised
size
standard
(10)
Current
size
standard
$5.0
$7.0
$5.0
0.533
$10.0
$7.0
$169.5
$5.0
0.473
$5.0
$7.0
6.1
$78.2
$5.0
$7.0
24.0
$95.6
$5.0
0.262
$5.0
0.535
$7.0
$7.0
$101.7
$5.0
0.482
$10.0
27.4
$5.0
$7.0
22.4
$356.8
$5.0
0.678
¥25
$14.0
$25.0
$19.0
0.587
$30.0
¥38.0
$10.0
$7.0
$120.5
$540.1
$5.0
0.731
$14.0
¥11.6
$19.0
$7.0
4.8
$25.5
$233.8
$30.0
0.494
$10.0
¥27.4
$7.0
$7.0
$6.0
$5.0
0.064
10.0
3.7
$5.0
$7.0
0.0
$0.0
$5.0
0.646
$14.0
$7.0
2.1
$6.8
$14.0
0.067
$5.0
$7.0
7.7
$3.6
$5.0
0.044
$5.0
$7.0
0.0
$0.0
$5.0
0.263
$5.0
$7.0
16.2
$20.4
$5.0
$7.0
10.4
$391.6
$5.0
$7.0
1.9
$4.2
$5.0
$7.0
60.2
$253.9
$19.0
$7.0
5.5
$10.0
$27.5
$5.0
$7.0
$0.6
19.4
$536.7
$7.0
$7.0
$5.0
$1.4
$19.0
36.6
$295.8
$19.0
$7.0
$0.1
$0.1
$5.0
Fmt 4702
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$5.0
0.207
$5.0
0.246
$5.0
0.019
$5.0
0.802
35.5
0.175
$5.0
0.353
$5.0
0.668
$19.0
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¥18.5
53948
Federal Register / Vol. 74, No. 202 / Wednesday, October 21, 2009 / Proposed Rules
TABLE 3—SIZE STANDARDS SUPPORTED BY EACH INDUSTRY FACTOR—Continued
[In millions of dollars]
(2)
Simple average firm
size
(1)
NAICS
pwalker on DSK8KYBLC1PROD with PROPOSALS
812310 .......................................
Coin-Operated Laundries and
Drycleaners ............................
812320 .......................................
Drycleaning and Laundry Services (except Coin-Operated) ..
812331 .......................................
Linen Supply ..............................
812332 .......................................
Industrial Launderers .................
812910 .......................................
Pet Care (except Veterinary)
Services ..................................
812921 .......................................
Photo Finishing Laboratories
(except One-Hour) ..................
812922 .......................................
One-Hour Photo Finishing .........
812930 .......................................
Parking Lots and Garages .........
812990 .......................................
All Other Personal Services .......
813211 .......................................
Grantmaking Foundations ..........
813212 .......................................
Voluntary Health Organizations
813219 .......................................
Other Grant Making and Giving
Services ..................................
813311 .......................................
Human Rights Organizations .....
813312 .......................................
Environment, Conservation and
Wildlife Organizations .............
813319 .......................................
Other Social Advocacy Organizations ....................................
813410 .......................................
Civic and Social Organizations ..
813910 .......................................
Business Associations ...............
813920 .......................................
Professional Organizations ........
813990 .......................................
Other Similar Organizations (except Business, Professional,
Labor, and Political Organizations) .......................................
(3)
Weighted
average
firm size
$0.3
$36.3
$5.0
$0.3
(5)
Four-firm
ratio
(%)
(6)
Four-firm
average
size
(7)
Gini coefficient
$0.2
28.6
$247.6
$19.0
$1.7
$5.0
$0.1
2.6
$50.9
$5.0
$3.9
$25.5
$9.7
$35.5
$0.2
$5.0
$38.3
$19.0
$157.3
$35.5
$2.0
$5.0
$1.9
$25.5
$5.7
$35.5
31.6
$243.8
61.1
$5.0
$1.7
$5.0
$103.5
$0.7
$10.0
$0.5
$5.0
$2.8
$19.0
$0.4
$5.0
$3.5
$19.0
$3.1
$19.0
$4.7
$35.5
$74.5
$35.5
$122.2
$35.5
$11.8
$5.0
$47.6
$25.5
$18.4
$7.0
$84.5
$30.0
$2.3
$14.0
$1.1
$35.5
$189.8
$35.5
$43.6
$1.5
$7.0
$0.8
$25.5
$8.2
$19.0
$0.7
$5.0
$0.5
$5.0
$1.0
$7.0
$1.6
$10.0
$0.7
$5.0
$5.7
$5.0
$13.8
$5.0
$17.2
$7.0
$19.0
$7.0
$0.7
$7.0
$0.9
$10.0
$1.6
$19.0
$0.8
$5.0
$7.0
$10.0
As can be seen in Table 3, the results
of SBA analyses of industry and Federal
contracting data would support
reducing the current size standards for
20 of 48 industries in the Other Services
Sector. However, SBA believes that
lowering size standard for those
industries would not be in the best
interests of small businesses in these
difficult times when the economy is in
a deep recession.
Aiming to promote economic recovery
and to preserve and create jobs the U.S.
Congress passed and the President
signed the American Recovery and
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assets
size
Frm 00056
(9)
Revised
size
standard
(10)
Current
size
standard
0.427
$7.0
$7.0
$5.0
0.187
$5.0
$4.5
$30.0
$14.0
$35.5
$14.0
6.3
$938.1
$35.5
$23.3
$5.0
0.768
$35.5
0.864
$35.5
0.118
$5.0
$7.0
45.3
$354.3
$5.0
0.725
$19.0
$7.0
34.0
$14.0
$61.3
$14.0
$7.0
$35.5
$7.0
$5.0
$7.0
$30.0
$7.0
$25.5
$7.0
$35.5
$7.0
$7.0
19.7
$819.1
$35.5
$248.3
15.3
$1,021.8
24.0
$464.2
14.6
$432.8
46.5
$2.7
$35.5
$0.2
$5.0
$15.0
$35.5
$2.3
$35.5
$30.0
0.391
$5.0
0.833
$35.5
0.422
$5.0
0.795
$35.5
0.730
$30.0
0.821
35.5
0.794
35.5
0.644
$25.5
$7.0
22.8
$460.7
$19.0
$249.5
$14.0
$7.0
11.8
$109.9
14.0
0.537
$5.0
$7.0
2.6
$96.4
$5.0
$7.0
3.9
$168.7
$7.0
$7.0
6.4
$176.6
$14.0
$7.0
8.3
$315.6
$7.0
$7.0
47.4
Fmt 4702
$5.0
0.393
$5.0
0.601
$7.0
0.672
$19.0
0.465
$5.0
Reinvestment Act of 2009 (Recovery
Act). The purposes and goals of the
Recovery Act are to promote economic
recovery and to preserve and create jobs.
Under the Recovery Act, SBA has
changed its various programs to assist
small businesses, including the
following: (1) Temporary reduction or
elimination of fees in the 7(a) and 504
loan guarantee programs; (2) creation of
a temporary 90 percent guarantee loan
program; (3) creation of a temporary
Secondary Market Guarantee Authority
to provide a Federal guarantee for pools
of first lien 504 loans that are to be sold
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Federal
contract
factor (%)
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to third-party investors; (4) new
authority for refinancing community
development loans under the 504
program; (5) revision of the job creation
goals of the 504 program; (6)
simplification of the maximum leverage
limits and aggregate investment limits
required of Small Business Investment
Companies; (7) temporary authority to
provide loans on a deferred basis to
viable small business concerns that have
a qualifying small business loan and are
experiencing immediate financial
hardship; (8) temporary increase in the
surety bond maximum amount; (9)
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establishment of a Secondary Market
Lending Authority to make loans to
systemically important broker dealers in
SBA’s 7(a) secondary market; and 10)
application of SBA’s Certified
Development Company (CDC)
alternative size standard to its 7(a)
Business Loan Program (see 13 CFR
121.301).
SBA believes that to reduce size
standards and thereby reduce eligibility
for those programs, or to reduce the
number of firms that can participate in
financial and Federal contracting
assistance programs would run counter
to what it is trying to do for small
businesses. Reducing size eligibility for
Federal contracting opportunities would
not preserve or create more jobs; rather,
it would have the opposite effect.
Therefore, SBA has decided not to
propose to reduce the size standards for
those industries. SBA has decided to
retain the current size standards for
those industries. Further, SBA does not
anticipate that it will propose to lower
size standards after the Recovery Act
terminates on September 30, 2010. SBA
intends for the proposed size standards,
if adopted, to remain in effect unless
and until it receives information or data
that suggests a change is needed.
Evaluation of Federal Contracting and
SBA Loan Data
Besides industry structure, SBA also
evaluates Federal contracting data to
assess the extent to which small
businesses are successful in getting
Federal contracts under the existing size
standards. However, the available data
on Federal contracting are limited to
identifying businesses as small or other
than small, with no information on
exact size of businesses receiving
Federal contracts in order to conduct a
more precise analysis.
Given limited data, for the current
comprehensive size review, SBA has
decided to designate a size standard at
one level higher than their current size
standard for industries where the small
business share of total Federal
contracting dollars is between 10 and 30
percentage points lower than their
shares in total industry receipts and at
two levels higher than the current size
standard if the difference is higher than
30 percentage points.
SBA has chosen not to designate a
size standard for the Federal contracting
factor alone that is higher than two
levels above the current size standard
because doing so would result in most
cases of designating a size standard
more than twice the current size
standard. Given the limitations of the
FPDS data, and the complex
relationships among a number of
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variables affecting small business
participation in the Federal
marketplace, SBA believes that a larger
adjustment to size standards based on
Federal contracting activity should be
based on a more detailed analysis of the
impact of any subsequent revision to the
current size standard. In limited
situations, however, SBA may conduct
a more extensive examination of Federal
contracting experience to support a
different size standard than indicated by
this general rule to take into
consideration significant and unique
aspects of small business
competitiveness in the Federal contract
market. SBA welcomes comment on its
methodology of incorporating the
Federal contracting factor in the size
standard analysis and suggestions for
alternative methods and other relevant
information on small business
experience in the Federal contract
market.
Five industries in Sector 81, Other
Services, received an average of $100
million or more annually in Federal
contracting dollars during fiscal years
2006–2008. These industries include
NAICS 811118, NAICS 811198, NAICS
811213, NAICS 811219, and NAICS
811310. Those are the industries that
have a Federal contracting factor in
column 8 of Table 3. In each of these
five industries, the small business share
of Federal contracting dollars was more
than 10 percentage points lower than
small business share of industry’s total
receipts. Therefore, as shown in Table 3,
a separate size standard was estimated
for the Federal contracting factor for
industries. In all cases, the estimated
size standard for the Federal contracting
market was higher than the current
standard. The latest data show that
Federal contracting activity is
insignificant for most of the industries
in Sector 81 and, for a few industries
where it is significant, small businesses
seem to be struggling in the Federal
marketplace relative to their share in
industry’s total sales.
Before deciding on an industry’s size
standard, SBA also considers the impact
of new or revised standards on SBA’s
loan programs. SBA examined 7(a) Loan
Program data for fiscal years 2006–2008
to assess whether the existing or
proposed size standards need further
adjustments to ensure credit
opportunities for small businesses
though that program. For the Other
Services industries, primarily small
businesses that are much smaller than
the current size standards use the 7(a)
Loan Program. Based on that analysis
and SBA’s decision not to reduce any
size standards in the proposed rule
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under the current economic conditions,
no size standard needs an adjustment.
Other Considerations
SBA has decided not to review the
size standard for NAICS 811212, the
Computer and Office Machine Repair
and Maintenance industry, at this time
and will continue to apply the current
$25 million size standard. The history of
the Computer and Office Machine
Repair industry explains the reasons for
this decision. Under the former
Standard Industrial Classification (SIC)
System, SBA had established a common
size standard for all industries in Sector
737, ‘‘Computer Programming, Data
Processing, and Other Computer Related
Services’’ (56 FR 38364, August 13,
1991 and 57 FR 27907, June 23, 1992).
In 1997, the NAICS replaced the SIC
System and moved most of the
industries in Sector 737 industry to the
Sector 54, ‘‘Professional, Scientific, and
Technical Services.’’ However, the
Computer Maintenance and Repair
activity was moved to Sector 81 and was
combined with Computer and Office
Machine Repair Maintenance services to
form NAICS 811212. Because Computer
Maintenance and Repair was the largest
component of the new industry, SBA
continued to apply the size standard for
computer services (64, FR 57188.
October 22, 1999 and 65 FR 30836, May
15, 2000). SBA continues to believe that
a common size standard should apply to
all of the computer services related
industries.
SBA plans to analyze the industries
within the NAICS Sector 54 in the near
future and will examine at that time
whether to retain the current $25
million size standard for the Computer
Services related industries (NAICS
541511–541519) or to propose a
different size standard. SBA welcomes
comments on whether it should
continue to apply the same size
standard for computer services to the
Computer and Office Machine Repair
Maintenance industry or consider a
different size standard based on its
industry characteristics.
SBA does not have industry data for
three industries in Sector 81—Religious
Organizations (NAICS 813110), Labor
Unions and Similar Labor Organizations
(NAICS 813930), and Political
Organizations (NAICS 813940). SBA’s
primary source of industry data is a
special tabulation of 2002 Economic
Census obtained from the Census
Bureau. However, the Census Bureau
does not collect data on these industries
as part of the Economic Census (See
‘‘Religious, Grantmaking, Civic,
Professional, and Similar Organizations,
2002’’, Other Services (Except Public
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Administration), Industry Series, EC02–
811–03, November 2004). In the absence
of relevant industry data on
organizations operating in these
industries, SBA is proposing to retain
the $7 million current size standard.
Although entities in these industries are
not-for-profit concerns, a need exists for
a numerical size standard for purposes
of the Regulatory Flexibility Act. SBA
welcomes comments on the suitability
of continuing the $7 million size
standard for these industries and
possible sources of alternative data.
Summary of size standards changes
Based on the analyses of currently
available data industry structure and
Federal contracting data, SBA proposes
to increase size standards for 18 of 47
industries in Sector 81, Other Services,
reviewed in this proposed rule. These
industries and their proposed size
standards are shown in Table 4. The
analyses supported retaining the
existing standards for 10 industries in
that Sector.
SBA’s analyses supported a decrease
to the current size standard for 19
industries in Other Services. However,
as discussed above, SBA feels that
proposing to lower small business size
standards would be inconsistent with its
ongoing effort to promote small business
assistance under the Recovery Act.
Therefore, SBA proposes to retain the
current size standards for those
industries. SBA intends for the
proposed size standards, if adopted, to
remain in effect unless and until it
receives information or data that
suggests a change is needed.
TABLE 4—SUMMARY OF PROPOSED SIZE STANDARD REVISIONS
Current size
standard
($million)
NAICS
811122—Automotive Glass Replacement Shops ...................................................................................................
811213—Communication Equipment Repair and Maintenance .............................................................................
811219—Other Electronic and Precision Equipment Repair and Maintenance .....................................................
811412—Appliance Repair and Maintenance .........................................................................................................
812191—Diet and Weight Reducing Centers .........................................................................................................
812220—Cemeteries and Crematories ...................................................................................................................
812320—Dry-cleaning and Laundry Services (except Coin-Operated) ..................................................................
812331—Linen Supply ............................................................................................................................................
812332—Industrial Launderers ...............................................................................................................................
812921—Photo Finishing Laboratories (except One-Hour) ....................................................................................
812922—One-Hour Photo Finishing .......................................................................................................................
812930—Parking Lots and Garages .......................................................................................................................
813211—Grantmaking Foundations ........................................................................................................................
813212—Voluntary Health Organizations ...............................................................................................................
813219—Other Grant Making and Giving Services ................................................................................................
813311—Human Rights Organizations ...................................................................................................................
813312—Environment, Conservation and Wildlife Organizations ..........................................................................
813920—Professional Organizations ......................................................................................................................
Evaluation of Dominance in Field of
Operation
SBA has determined that for each
industry in Sector 81, Other Services, no
firm at or below the proposed size
standard would be large enough to
dominate its field of operation. A firm
at the proposed size standard in each of
these industries generates less than one
percent of total industry receipts. This
level of market share effectively
precludes a firm at or below the
proposed size standard from exerting a
controlling effect on this industry.
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Request for Comments
SBA invites public comments on the
proposed rule, especially on the
following areas.
1. In an effort to simplify size
standards, for this proposed rule, SBA
has proposed a set of eight fixed size
levels for receipts based size standards:
$5.0 million, $7.0 million, $10.0
million, $14.0 million, $19.0 million,
$25.5 million, $30.0 million, and $35.5
million. SBA invites comments on
whether simplification of size standards
in this way is necessary and if these
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proposed fixed size levels are
appropriate, or suggestions on
alternative approaches to simplifying
small business size standards.
2. For industries in Sector 81, Other
Services, SBA has proposed receipts
based size standards ranging from $5
million to $35.5 million. SBA seeks
feedback on whether the levels of size
standards it proposes seem right given
the economic characteristics of each
industry. SBA also seeks feedback and
suggestions on alternative standards, if
they would be more appropriate,
including whether an employee based
standard for certain industries is a more
suitable measure of size, and what that
employee level should be.
3. SBA’s proposed standards are
based on its evaluation of five primary
factors—average firm size, average
assets size (as proxy of startup costs and
entry barriers), four-firm concentration
ratio, distribution of firms by size, and
the level and small business share of
Federal contracting dollars. SBA
welcomes comments on these and other
factors that interested parties believe are
important to consider for describing
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$7.0
$7.0
$7.0
$7.0
$7.0
$7.0
$4.5
$14.0
$14.0
$7.0
$7.0
$7.0
$7.0
$7.0
$7.0
$7.0
$7.0
$7.0
Revised size
standard
(million)
$10.0
$10.0
$19.0
$14.0
$19.0
$19.0
$5.0
$30.0
$35.5
$19.0
$14.0
$35.5
$30.0
$25.5
$35.5
$25.5
$14.0
$14.0
industry characteristics when SBA
evaluates its size standards. Please
provide relevant data sources, if
available.
4. SBA derives its proposed standards
by applying equal weights to each of the
five primary factors in all industries.
Should SBA continue with the equal
weighting of each factor or should it
give more weight to one or more factors
in size standard determination of certain
industries? If it is more appropriate to
weigh some factors more than others,
SBA welcomes suggestions on specific
weights for each factor along with
supporting information.
5. For some industries, SBA proposes
to increase the existing size standards
by a large amount, while for others the
proposed increase is less. Should SBA,
as a policy, limit the amount of increase
or decrease to a size standard? Also
should SBA, as a policy, establish
certain minimum or maximum values
for its size standards? SBA seeks
suggestions on appropriate levels of
change to size standards and on their
minimum or maximum levels.
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6. For analytical simplicity and
efficiency, SBA has refined its size
standard methodology to obtain a single
value as a proposed size standard
instead of a range of values as was
SBA’s methodology in its past size
regulations. SBA welcomes any
comments on this procedure and
suggestions for alternative methods.
Public comments on above issues are
very critical for SBA to validate its size
standard methodology and move
forward in a timely manner with review
of size standards of other industry
groups under the two-year
comprehensive size review.
Compliance With Executive Orders
12866, 12988, and 13132, the
Paperwork Reduction Act (44 U.S.C.
Ch. 35), and the Regulatory Flexibility
Act (5 U.S.C. 601–612)
Executive Order 12866
The Office of Management and Budget
(OMB) has determined that this
proposed rule is a ‘‘significant’’
regulatory action for purposes of
Executive Order 12866. Accordingly,
the next section contains SBA’s
Regulatory Impact Analysis. This is not
a major rule, however, under the
Congressional Review Act, 5 U.S.C. 800.
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Regulatory Impact Analysis
1. Is there a need for the regulatory
action?
SBA believes that adjustments to
certain size standards in Sector 81,
Other Services, are needed to better
reflect the economic characteristics of
small businesses in those industries.
SBA’s mission is to aid and assist small
businesses through a variety of
financial, procurement, business
development, and advocacy programs.
To assist effectively the intended
beneficiaries of these programs, SBA
must establish distinct definitions of
which businesses are deemed small
businesses. The Small Business Act (15
U.S.C. 632(a)) delegates to SBA’s
Administrator the responsibility for
establishing small business definitions.
The Act also requires that small
business definitions vary to reflect
industry differences. The
supplementary information section of
this proposed rule explains SBA’s
methodology for analyzing a size
standard for a particular industry.
2. What are the potential benefits and
costs of this regulatory action?
The most significant benefit to
businesses obtaining small business
status as a result of this rule is eligibility
for Federal small business assistance
programs, including SBA’s financial
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assistance programs, economic injury
disaster loans, and Federal procurement
preference programs for small
businesses. Federal procurement
provides opportunities for small
businesses under SBA’s business
development programs, such as 8(a),
Small Disadvantaged Businesses (SDB),
small businesses located in Historically
Underutilized Business Zones
(HUBZone), women owned small
businesses, and service disabled veteran
owned small businesses (SDVOSB).
Other Federal agencies also may use
SBA size standards for a variety of
regulatory and program purposes.
Through the assistance of these
programs, small businesses become
more knowledgeable, stable, and
competitive businesses.
Of 18 industries in Sector 81 for
which SBA has proposed to increase
their size standards, 12 are for-profit
industries and six are non-profits. In the
12 for-profit industries for which SBA
has proposed to increase their size
standards, about 325 additional firms
are estimated to obtain small business
status and become eligible for these
programs. That represents 0.6 percent of
total firms and 5.6 percent of total sales
in those industries. In the six non-profit
industries, about 1,175 additional firms,
representing 4.2 percent of total firms
and 16.9 percent of total sales in those
industries, are estimated to qualify as
small organizations (a non-profit cannot
qualify as a small business). 13 CFR
121.105. In the 19 industries (including
non-profits) for which SBA’s analyses
indicated a lower size standard is
appropriate, about 1,850 firms,
representing 0.6 percent of total firms
and 5.1 percent of total sales in those
industries, might have lost their small
business status, had SBA proposed
lowering their size standards. Thus, the
net impact for the Sector as a whole is
about 1,400 additional firms gaining and
none losing small business status under
the proposed rule. This will increase the
small business share of total industry
receipts for the Sector from 59.0 percent
under the current size standards to 63.5
percent under the proposed standards.
The benefits of increasing certain size
standards to a more appropriate level
would accrue to three groups: (1)
Businesses that benefit by gaining small
business status from the higher size
standard that also use small business
assistance programs; (2) growing small
businesses that may exceed the current
size standards in the near future and
that will retain small business status
from the higher size standard; and (3)
Federal agencies that award contracts
under procurement programs that
require small business status.
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More than 40 percent of total Federal
contracting dollars received by
industries in Sector 81 (excluding
NAICS 811212 and those in Subsector
813)) during fiscal years 2006–2008 was
accounted for by two of the 18
industries for which size standards have
been proposed to increase, namely
NAICS 811213 and NAICS 811219. SBA
estimates that additional firms gaining
small business status in those two and
other industries in Subsectors 811 and
812 under the proposed size standards
could potentially obtain Federal
contracts totaling up to between $25
million and $30 million per year under
the small business set-aside program,
the 8(a), HUBZone, and SDVOSB
Programs, or unrestricted procurements.
The added competition for many of
these procurements also would likely
result in a lower price to the
Government for procurements reserved
for small businesses, but SBA is not able
to quantify this benefit.
Under SBA’s 7(a) Guaranteed Loan
Program and Certified Development
Company (504) Program, SBA estimates
that approximately 10 additional loans
totaling between $4 million and $5
million in new Federal loan guarantees
could be made to these newly defined
small businesses. Because of the size of
the loan guarantees, however, most
loans are made to small businesses well
below the size standard. Moreover,
under the Recovery Act, effective
February 17, 2009, SBA is temporarily
raising guarantees on its SBA 7(a) loan
program and also temporarily
eliminating fees for borrowers on SBA
7(a) loans and for both borrowers and
lenders on 504 Certified Development
Company loans, through calendar year
2009, or until the funds are exhausted.
The fee elimination is retroactive to
February 17, 2009, the day the Recovery
Act was signed. Furthermore, SBA is
developing a mechanism for refunding
fees paid on loans since then. In
addition, since SBA has applied its CDC
alternative size standard to its 7(a)
Business Loan Program, more capital is
available to small businesses. Thus,
increasing the size standards will likely
result in an increase in small business
guaranteed loans to businesses in these
industries, but it would be impractical
to try to estimate the extent of their
number and the total amount loaned.
The newly defined small businesses
would also benefit from SBA’s
Economic Injury Disaster Loan (EIDL)
Program. Since this program is
contingent upon the occurrence and
severity of a disaster, no meaningful
estimate of benefits can be projected for
future disasters.
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To the extent that 325 additional
firms in Subsectors 811 and 812 that
become small under the proposed size
standards could become active in
Federal procurement programs, this may
entail some additional administrative
costs to the Federal Government
associated with additional bidders for
Federal small business procurement
opportunities, additional firms seeking
SBA guaranteed lending programs,
additional firms eligible for enrollment
in Central Contractor Registration’s
Dynamic Small Business Search
database, and additional firms seeking
certification as 8(a) or HUBZone firms
or qualifying for SDB status. Among
businesses in this group seeking SBA
assistance, there could be some
additional costs associated with
compliance and verification of small
business status and protests of small
business status. These additional costs
are likely to be minimal because
mechanisms are already in place to
handle these additional administrative
requirements.
The costs to the Federal Government
may be higher on some Federal
contracts. With a greater number of
businesses defined as small, Federal
agencies may choose to set aside more
contracts for competition among small
businesses rather than using full and
open competition. The movement from
unrestricted to set-aside contracting is
likely to result in competition among
fewer bidders. In addition, higher costs
may result if additional full and open
contracts are awarded to HUBZone and
SDB businesses because of a price
evaluation preference. The additional
costs associated with fewer bidders,
however, are likely to be minor since, as
a matter of law, procurements may be
set aside for small businesses or
reserved for the 8(a) or HUBZone
Programs only if awards are expected to
be made at fair and reasonable prices.
The proposed size standards may
have distributional effects among large
and small businesses. Although the
actual outcome of the gains and losses
among small and large businesses
cannot be estimated with certainty,
several likely impacts can be identified.
There will likely be a transfer of some
Federal contracts to small businesses
from large businesses. Large businesses
may have fewer Federal contract
opportunities as Federal agencies decide
to set aside more Federal contracts for
small businesses. Also, some Federal
contracts may be awarded to HUBZone
or SDB concerns instead of large
businesses since those two categories of
small businesses may be eligible for an
evaluation adjustment for contracts
competed on a full and open basis.
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Similarly, currently defined small
businesses may obtain fewer Federal
contracts due to the increased
competition from more businesses
defined as small. This transfer may be
offset by a greater number of Federal
procurements set aside for all small
businesses. The number of newly
defined and expanding small businesses
that are willing and able to sell to the
Federal Government will limit the
potential transfer of contracts away from
large and currently defined small
businesses. The potential distributional
impacts of these transfers may not be
estimated with any degree of precision
because the data on the size of
businesses receiving a Federal contract
are limited to identifying small or other
than small businesses, without regard to
the exact size of the business.
As mentioned above, in addition to
the estimated 325 businesses that may
qualify as small if this proposed rule is
adopted, an additional 1,175 non-profit
organizations may also be designated as
small organizations within the
industries in Subsector 813—Religious,
Grantmaking, Civic, Professional and
Similar Organizations. Non-profit
organizations do not qualify for SBA
small business programs or for Federal
contracts reserved for small business (13
CFR 121.105). However, Federal
agencies pursuant to the Regulatory
Flexibility Act must consider the impact
of their regulations on small entities,
which by definition include small
businesses, small organizations, and
small governmental jurisdictions (5
U.S.C. 601(b)). SBA’s Office of
Advocacy advises Federal agencies to
use SBA’s numerical size standards by
NAICS industry when assessing the
impact of a regulation on small
organizations.
The proposed revisions to the existing
size standards for the Other Services
industries are consistent with SBA’s
statutory mandate to assist small
business. This regulatory action
promotes the Administration’s
objectives. One of SBA’s goals in
support of the Administration’s
objectives is to help individual small
businesses succeed through fair and
equitable access to capital and credit,
Government contracts, and management
and technical assistance. Reviewing and
modifying size standards, when
appropriate, ensures that intended
beneficiaries have access to small
business programs designed to assist
them.
Executive Order 12988
For purposes of Executive Order
12988, SBA has determined that this
rule is drafted, to the extent practicable,
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in accordance with the standards set
forth in that Order.
Executive Order 13132
For purposes of Executive Order
13132, SBA has determined that this
rule does not have any Federalism
implications warranting the preparation
of a federalism assessment.
Paperwork Reduction Act
For the purpose of the Paperwork
Reduction Act, 44 U.S.C. Ch. 35, SBA
has determined that this rule would not
impose new reporting or recordkeeping
requirements, other than those required
of SBA.
Initial Regulatory Flexibility Analysis
Under the Regulatory Flexibility Act
(RFA), this rule, if finalized, may have
a significant impact on a substantial
number of small entities in Sector 81,
Other Services. As described above, this
rule may affect small entities seeking
Federal contracts, SBA (7a) and 504
Guaranteed Loan Programs, SBA
Economic Injury Disaster Loans, and
other Federal small business programs.
Immediately below, SBA sets forth an
initial regulatory flexibility analysis
(IRFA) of this proposed rule addressing
the following questions: (1) What is the
need for and objective of the rule? (2)
what is SBA’s description and estimate
of the number of small entities to which
the rule will apply? (3) what are the
projected reporting, recordkeeping, and
other compliance requirements of the
rule? (4) what are the relevant Federal
rules which may duplicate, overlap or
conflict with the rule? and (5) what
alternatives will allow the Agency to
accomplish its regulatory objectives
while minimizing the impact on small
entities?
(1) What is the need for and objective of
the rule?
Most of SBA’s size standards for the
Other Services industries have not been
reviewed since the early 1980s, and
many have not been changed since the
1960s, except for periodic adjustments
for inflation. Technology, productivity
growth, international competition,
mergers and acquisitions, and updated
industry definitions may have changed
the structure of many industries. Such
changes can be sufficient to support a
revision to size standards for some
industries. Based on an analysis of the
latest data available to the Agency, SBA
believes that the revised standards in
this proposed rule more appropriately
reflect the size of businesses in those
industries that need Federal assistance.
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(2) What is SBA’s description and
estimate of the number of small entities
to which the rule will apply?
If this rule is adopted in its present
form, SBA estimates that approximately
1,400 additional firms will become
small because of proposed increases in
size standards in the 18 industries
within Sector 81. That represents about
1.8 percent of approximately 75,500
total firms in those industries. This will
result in an increase in the small
business share of total industry receipts
for that Sector from 59.0 percent under
the current size standards to 63.5
percent under the proposed standards.
(3) What are the projected reporting,
record keeping, and other compliance
requirements of the rule and an estimate
of the classes of small entities which
will be subject to the requirements?
A new size standard does not impose
any additional reporting, recordkeeping
or compliance requirements on small
entities. Revising size standards alters
the access to SBA programs that assist
small businesses, but does not impose a
regulatory burden as they neither
regulate nor control business behavior.
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. 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 57988–57991,
dated 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). Thus, there may be instances
where this rule conflicts with other
rules.
(4) What are the relevant Federal rules
which may duplicate, overlap or
conflict with the rule?
This proposed rule overlaps with
other Federal rules that use SBA’s size
standards to define a small business.
(5) What alternatives will allow the
Agency to accomplish its regulatory
objectives while minimizing the impact
on small entities?
SBA is required to develop numerical
size standards for identifying businesses
53953
eligible for Federal small business
programs. Other than varying the size
standards, no viable alternative exists to
the systems of numerical size standards.
List of Subjects in 13 CFR Part 121
Administrative practice and
procedure, Government procurement,
Government property, Grant programs—
business, Individuals with disabilities,
Loan programs—business, Reporting
and recordkeeping requirements, Small
businesses.
For the reasons set forth in the
preamble, SBA proposes to amend 13
CFR Part 121 as follows.
PART 121—SMALL BUSINESS SIZE
REGULATIONS
1. The authority citation for part 121
continues to read as follows:
Authority: 15 U.S.C. 632, 634(b)(6), 636(b),
637(a), 644, and 662(5); and Pub. L. 105–135,
sec. 401 et seq., 111 Stat. 2592.
2. Amend the table in § 121.201 by
revising all entries under Sector 81 to
read as follows:
§ 121.201 What size standards has SBA
identified by North American Industry
Classification System codes?
*
*
*
*
*
SMALL BUSINESS SIZE STANDARDS BY NAICS INDUSTRY
NAICS
codes
Size standards
in millions of
dollars
NAICS U.S. industry title
Sector 81—Other Services (Except Public Administration)
Subsector 811—Repair and Maintenance
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811111
811112
811113
811118
811121
811122
811191
811192
811198
811211
811212
811213
811219
811310
.........
.........
.........
.........
.........
.........
.........
.........
.........
.........
.........
.........
.........
.........
811411
811412
811420
811430
811490
.........
.........
.........
.........
.........
General Automotive Repair ...........................................................................................................
Automotive Exhaust System Repair .............................................................................................
Automotive Transmission Repair ..................................................................................................
Other Automotive Mechanical and Electrical Repair and Maintenance .......................................
Automotive Body, Paint and Interior Repair and Maintenance ....................................................
Automotive Glass Replacement Shops ........................................................................................
Automotive Oil Change and Lubrication Shops ............................................................................
Car Washes ...................................................................................................................................
All Other Automotive Repair and Maintenance ............................................................................
Consumer Electronics Repair and Maintenance ..........................................................................
Computer and Office Machine Repair and Maintenance .............................................................
Communication Equipment Repair and Maintenance ..................................................................
Other Electronic and Precision Equipment Repair and Maintenance ..........................................
Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance.
Home and Garden Equipment Repair and Maintenance .............................................................
Appliance Repair and Maintenance ..............................................................................................
Reupholstery and Furniture Repair ...............................................................................................
Footwear and Leather Goods Repair ...........................................................................................
Other Personal and Household Goods Repair and Maintenance ................................................
$7.0
$7.0
$7.0
$7.0
$7.0
$10.0
$7.0
$7.0
$7.0
$7.0
$25.0
$10.0
$19.0
$7.0
$7.0
$14.0
$7.0
$7.0
$7.0
Subsector 812—Personal and Laundry Services
812111 .........
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Size standards
in number of
employees
53954
Federal Register / Vol. 74, No. 202 / Wednesday, October 21, 2009 / Proposed Rules
SMALL BUSINESS SIZE STANDARDS BY NAICS INDUSTRY—Continued
NAICS
codes
812112
812113
812191
812199
812210
812220
812310
812320
812331
812332
812910
812921
812922
812930
812990
Size standards
in millions of
dollars
NAICS U.S. industry title
.........
.........
.........
.........
.........
.........
.........
.........
.........
.........
.........
.........
.........
.........
.........
Beauty Salons ...............................................................................................................................
Nail Salons ....................................................................................................................................
Diet and Weight Reducing Centers ..............................................................................................
Other Personal Care Services ......................................................................................................
Funeral Homes and Funeral Services ..........................................................................................
Cemeteries and Crematories ........................................................................................................
Coin-Operated Laundries and Drycleaners ..................................................................................
Drycleaning and Laundry Services (except Coin-Operated) ........................................................
Linen Supply ..................................................................................................................................
Industrial Launderers .....................................................................................................................
Pet Care (except Veterinary) Services .........................................................................................
Photo Finishing Laboratories (except One-Hour) .........................................................................
One-Hour Photo Finishing .............................................................................................................
Parking Lots and Garages ............................................................................................................
All Other Personal Services ..........................................................................................................
Size standards
in number of
employees
$7.0
$7.0
$19.0
$7.0
$7.0
$19.0
$7.0
$5.0
$30.0
$35.5
$7.0
$19.0
$14.0
$35.5
$7.0
Subsector 813—Religious, Grantmaking, Civic, Professional and Similar Organizations
813110
813211
813212
813219
813311
813312
813319
813410
813910
813920
813930
813940
813990
.........
.........
.........
.........
.........
.........
.........
.........
.........
.........
.........
.........
.........
Religious Organizations ................................................................................................................
Grantmaking Foundations .............................................................................................................
Voluntary Health Organizations ....................................................................................................
Other Grantmaking and Giving Services ......................................................................................
Human Rights Organizations ........................................................................................................
Environment, Conservation and Wildlife Organizations ................................................................
Other Social Advocacy Organizations ..........................................................................................
Civic and Social Organizations .....................................................................................................
Business Associations ...................................................................................................................
Professional Organizations ...........................................................................................................
Labor Unions and Similar Labor Organizations ............................................................................
Political Organizations ...................................................................................................................
Other Similar Organizations (except Business, Professional, Labor, and Political Organizations).
AGENCY: Securities and Exchange
Commission.
ACTION: Proposed rule.
Notice of Internet Availability of Proxy
Materials that is sent to shareholders.
We are also providing guidance about
the current requirement for the Notice to
identify the matters intended to be acted
on at the shareholders’ meeting. In
addition to the proposed changes and
guidance regarding the format of the
Notice, we are proposing a new rule that
will permit issuers and soliciting
shareholders to include explanatory
materials regarding the process of
receiving and reviewing proxy materials
and voting. Finally, we are proposing
revisions to the timeframe for delivering
a Notice to shareholders when a
soliciting person other than the issuer
relies on the notice-only option.
DATES: Comments should be received on
or before November 20, 2009.
ADDRESSES: Comments may be
submitted by any of the following
methods:
SUMMARY: We are proposing changes to
the proxy rules under the Securities
Exchange Act of 1934 to improve the
notice and access model for furnishing
proxy materials to shareholders.
Specifically, we are proposing revisions
to our rules to provide additional
flexibility regarding the format of the
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/proposed.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number S7–22–09 on the subject line;
or
*
*
*
*
*
Dated October 9, 2009.
Karen G. Mills,
Administrator.
[FR Doc. E9–25199 Filed 10–20–09; 8:45 am]
BILLING CODE 8025–01–P
SECURITIES AND EXCHANGE
COMMISSION
17 CFR Parts 230 and 240
[Release Nos. 33–9073; 34–60825; IC–
28946; File No. S7–22–09]
RIN 3235–AK25
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$7.0
• Use the Federal eRulemaking Portal
(https://www.regulations.gov). Follow the
instructions for submitting comments.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number S7–22–09. This file number
should be included on the subject line
if e-mail is used. To help us process and
review your comments more efficiently,
please use only one method. The
Commission will post all comments on
the Commission’s Web site (https://
www.sec.gov/rules/proposed.shtml).
Comments are also available for public
inspection and copying in the
Commission’s Public Reference Room,
100 F Street, NE., Washington, DC
20549, on official business days
between the hours of 10 a.m. and 3 p.m.
All comments received will be posted
without change; we do not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly.
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]]>Agencies
[Federal Register Volume 74, Number 202 (Wednesday, October 21, 2009)]
[Proposed Rules]
[Pages 53941-53954]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-25199]
-----------------------------------------------------------------------
SMALL BUSINESS ADMINISTRATION
13 CFR Part 121
RIN 3245-AF70
Small Business Size Standards: Other Services Industries
AGENCY: U.S. Small Business Administration.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: The U.S. Small Business Administration (SBA) proposes to
increase the small business size standards for 18 industries in North
American Industry Classification System (NAICS) Sector 81, Other
Services, and retain the current standards for the remaining 30
industries in the Sector. As part of its ongoing initiative to review
all size standards, SBA has evaluated each industry in Sector 81 to
determine whether the existing size standards should be retained or
revised. This proposed rule is one of a series of proposals that will
examine industries grouped by an NAICS Sector. As part of this series
of proposed rules SBA is publishing concurrently in this issue of the
Federal Register a proposed rule to modify small business size
standards in Sector 44-45, Retail Trade and, in Sector 72,
Accommodation and Food Services. SBA has established its ``Size
Standards Methodology'' and published elsewhere in this issue of the
Federal Register a notice of its availability on SBA's Web site at
https://www.sba.gov/size. SBA has applied ``Size Standards Methodology''
to this proposed rule.
DATES: SBA must receive comments to this proposed rule on or before
December 21, 2009.
ADDRESSES: You may submit comments, identified by RIN 3245-AF70 by one
of the following methods: (1) Federal eRulemaking Portal: https://www.regulations.gov. Follow the instructions for submitting comments;
or (2) Mail/Hand Delivery/Courier: Khem R. Sharma, Chief, Size
Standards Division, 409 Third Street, SW., Mail Code 6530, Washington,
DC 20416.
SBA will post all comments on www.regulations.gov. If you wish to
submit confidential business information (CBI) as defined in the User
Notice at www.regulations.gov, please submit the information to U.S.
Small Business Administration, Khem R. Sharma, Chief, Size Standards
Division, 409 Third Street, SW., Mail Code 6530, Washington, DC 20416,
or send an e-mail to sizestandards@sba.gov. Highlight the information
that you consider to be CBI and explain why you believe SBA should hold
this information as confidential. SBA will review the information and
make the final determination of whether it will publish the information
or not.
FOR FURTHER INFORMATION CONTACT: Carl J. Jordan, Program Analyst, Size
Standards Division, (202) 205-6618 or sizestandards@sba.gov.
SUPPLEMENTARY INFORMATION: To determine eligibility for Federal small
business assistance programs, SBA establishes small business
definitions (referred to as size standards) for private sector
industries in the U.S. SBA's existing size standards use two primary
measures of business size--receipts and number of employees. Financial
assets, electric output, and refining capacity are used as size
measures for a few specialized industries. In addition, SBA's Small
Business Investment Company (SBIC) and the Certified Development
Company (CDC) Programs determine small business eligibility using
either the industry based size standards or net worth and net income
size standards. Currently, SBA's size standards consist of 45 different
size levels, covering 1,141 NAICS industries and 17 sub-industry
activities. Of these size levels, 32 are based on average annual
receipts, eight are based on number of employees, and five are based on
other measures. In addition, SBA has established 11 other size
standards for its financial and procurement programs.
Over the years, SBA has received comments that its size standards
have not kept up with changes in the economy and, in particular, that
they do not reflect the changes in the Federal contracting marketplace.
The last overall review of size standards occurred during the late
1970s to early 1980s. Since then, most reviews of size standards have
been limited to in-depth analyses of specific industries in response to
requests from the public and Federal agencies. SBA also makes periodic
inflation adjustments to its monetary based size standards. The latest
inflation adjustment to size standards was published in the Federal
Register on July 18, 2008 (73 FR 41237).
[[Page 53942]]
The evaluation of the size standards in the Other Services is also
necessary to account for changes in the industry classification. The
development of NAICS in 1997 included significant changes in the
definition of industries compared to the earlier Standard Industrial
Classification (SIC) system. The NAICS update used in the 2002 Economic
Census included further changes in industry definitions from the 1997
NAICS used in the 1997 Economic Census. These changes in the industry
classification have led SBA to evaluate if the existing size standards
for the Other Services industries are appropriate. Most of the size
standards for industries in Sector 81, Other Services, have not been
reviewed since the 1980s, and many have not been changed since the
1960s, except for periodic adjustments for inflation.
SBA recognizes that industrial changes over time have rendered
existing size standards for some industries no longer supportable by
current data. Accordingly, SBA has begun a comprehensive review of its
size standards to ensure that existing size standards have supportable
bases and, where necessary, to make revisions to current size
standards. This proposed rule affords the public an opportunity to
review and comment on the data and methodology SBA uses to evaluate and
revise a size standard.
Rather than review all size standards at one time, SBA believes
that a more manageable approach would be to examine a group of related
industries within an NAICS Sector in phases. Except for manufacturing,
an NAICS Sector generally consists of 25 to 75 industries. Once a
review of size standards for industries within an NAICS Sector is
completed, SBA will issue a proposed rule for those industries in which
the analysis of industry data supports a change to the existing size
standards. SBA expects to complete a review of all NAICS Sectors in two
years.
Below is a discussion of SBA's size standards methodology,
including analyses of industry structure, Federal procurement trends
and other factors for industries within Sector 81, Other Services, and
the impact of the proposed revisions to size standards on Federal small
businesses assistance.
Size Standards Methodology
SBA has recently developed a ``Size Standards Methodology'' that it
uses for developing and modifying size standards when necessary. SBA
has published the document which is available at https://www.sba.gov/size. SBA does not apply all features of its ``Size Standards
Methodology'' to all cases because not all are appropriate. However,
SBA does make it available in its entirety for parties with an interest
in SBA's overall approach to evaluating, establishing and modifying
small business size standards. SBA always explains its analysis in the
proposed and final rules that relate to size standards for specific
industries. The following discussion is of SBA's size standard analysis
applied to industries in Sector 81, Other Services.
SBA welcomes comments from the public on a number of issues. SBA is
aware that different choices among size standards can involve complex
tradeoffs among relevant variables; SBA invites comments on how to
identify and weigh those variables. Suggestions are invited on
alternative methodologies for determining small businesses; on how
these size standards affect competition in general and within the
specific industry; on alternative or additional factors that SBA should
consider; on whether SBA's approach to small business size standards
makes sense in the current economic environment; on whether SBA's using
anchor size standards is appropriate in the current economy; on whether
there are gaps in SBA's methodology because of the lack of
comprehensive data; and on alternative datasets SBA should consider for
a specific sector.
Congress granted SBA's Administrator discretion to establish
detailed small business size standards (15 U.S.C. 632(a)(2)). Section
3(a)(3) of the Small Business Act (15 U.S.C. 632 (a)(3)) requires that
size standards vary by industry to the extent necessary to reflect
differing characteristics among various industries. Accordingly, the
economic structure of an industry serves as the underlying basis for
developing and modifying small business size standards. By examining
data on economic characteristics defining the industry structure (as
described below), the small business segment of an industry is
identified. In addition to the industry structure, SBA also takes into
consideration its program objectives and whether a size standard
successfully excludes businesses that are dominant in the industry.
Discussed below is SBA's analysis of the economic characteristics of
each industry in Sector 81, Other Services, the impact of proposed size
standards on SBA programs, and the evaluation of whether a revised size
standard would exclude dominant firms in the industry from being
considered as small.
Industry Analysis
For the current comprehensive size review, SBA has established
three ``base'' or ``anchor'' size standards that apply to most
industries--$7.0 million in average annual receipts for industries that
have receipts based size standards, 500 employees for manufacturing and
other industries that have employee based size standards (except for
Wholesale Trade), and 100 employees for industries in the Wholesale
Trade Sector. SBA established 500 employees as the anchor size standard
for the manufacturing industries at SBA's inception in 1953 and shortly
thereafter established a receipts based anchor size standard of $1
million in average annual receipts for the nonmanufacturing industries.
The receipts based anchor size standard has been adjusted periodically
for inflation. The inflation adjustment over the years has increased it
to $7.0 million today. Since 1986, all industries in the Wholesale
Trade Sector have had the 100-employee size standard for all non-
procurement SBA programs. For procurement purposes, the size standard
for a non-manufacturer is 500 employees.
These long-standing anchor size standards have gained legitimacy
through practice and general public acceptance. An anchor size standard
is neither a minimum nor a maximum size standard. It is a common size
standard for a large number of industries that have similar economic
characteristics and serves as a reference point in evaluating size
standards for individual industries. SBA uses the anchor in lieu of
trying to establish precise small business size standards for each
industry. Otherwise, theoretically, that could require that the number
of size standards be as high as the number of industries for which SBA
establishes size standards. SBA presumes an anchor size standard is
appropriate size standard for a particular industry unless that
industry displays significantly different economic characteristics, as
compared to the characteristics of industries with the anchor size
standard, thereby suggesting a need for revision to an existing size
standard.
When evaluating a size standard, the economic characteristics of a
specific industry under review are compared to the average
characteristics of industries with one of the three anchor size
standards (referred to as ``anchor comparison group'') to assess
industry structure and to determine whether the industry displays
significant differences relative to the industries in the anchor size
standard group. If the characteristics of a specific industry
[[Page 53943]]
under review are similar to the average characteristics of the anchor
comparison group, the anchor size standard would be considered
appropriate for that industry. SBA will consider adopting a size
standard below the anchor size standard only when (1) all or most of
the industry characteristics are significantly smaller than the average
characteristics of the anchor comparison group, or (2) other industry
considerations strongly suggest that the anchor size standard would be
an unreasonably high size standard for the industry.
If the specific industry's characteristics are significantly higher
than those of the anchor comparison group, a size standard higher than
the anchor size standard may be considered appropriate. The larger the
differences are between the characteristics of the industry under
review and those in the anchor comparison group, the larger will be the
difference between the appropriate industry size standard and the
anchor size standard. To determine the level of a size standard above
the anchor size standard, the characteristics of a second comparison
group are analyzed. For industries with receipts based size standards,
SBA has developed a second comparison group consisting of industries
with the highest levels of receipts based size standards. The size
standards for this group of industries range from $23 million to $35.5
million in average receipts, with the weighted average size standard
for the group equaling $29 million. SBA refers to this comparison group
as the ``higher level receipts based size standard group.''
The primary factors that SBA evaluates in analyzing the structural
characteristics of an industry include average firm size, startup costs
and entry barriers, industry competition, and distribution of firms by
size (13 CFR 121.102(a) and (b)). SBA also evaluates the possible
impact of both existing and revised size standards on Federal
contracting assistance to small businesses as an additional primary
factor. SBA generally considers these five factors as the most
important ones for establishing or revising a size standard for an
industry. However, SBA will also consider and evaluate other
information that it believes relevant to the decision on a size
standard for a particular industry (such as technological changes,
growth trends, SBA financial assistance and other program factors,
etc.). Public comments on a proposed size standard rule also provide
important additional information. SBA thoroughly reviews all public
comments before making a final decision on its proposed size standard.
Below is a brief description of each of the five primary evaluation
factors. A more detailed description of this analysis is provided in
the ``SBA Size Standards Methodology'' paper which is available at
https://www.sba.gov/size.
1. Average firm size. SBA computes two measures of average firm
size: simple average firm size and weighted average firm size. For
industries with receipts based standards (including Other Services
industries), the simple average firm size is calculated as total
receipts of an industry divided by the total number of firms in that
industry. The weighted average firm size is computed as the sum of
weighted simple average firm size in different receipts size classes
where weights are the shares of total industry receipts for respective
size classes. The simple average firm size weighs all firms within an
industry equally regardless of their size. The weighted average
overcomes that limitation by giving more weights to larger firms.
If the average firm size of an industry under review is
significantly higher than the average firm size of industries in the
anchor comparison industry group, this would generally support a size
standard higher than the anchor size standard. Conversely, if the
industry's average firm size is similar to or significantly lower than
that of the anchor comparison industry group, it would be a basis to
adopt the anchor size standard or, in rare cases, a standard lower than
the anchor.
2. Startup costs. Startup costs reflect a firm's initial size in an
industry. New entrants to an industry must have sufficient capital to
start and maintain a viable business. If firms entering a particular
industry have greater capital requirements than firms do in industries
in the anchor comparison group, this will form a basis for establishing
a size standard higher than the anchor standard. In lieu of data on
actual startup costs, SBA uses average assets size as a proxy measure
to assess the levels of capital requirements for new entrants to an
industry.
SBA calculates the average assets size within a particular industry
by applying the sales to total assets ratios from the Risk Management
Association's Annual Statement Studies, 2006-2008 to the average
receipts size of firms in that industry. An industry with a
significantly higher level of average assets size than that of the
anchor comparison group is likely to have higher startup costs, which
would support a size standard higher than the anchor size standard.
Conversely, if the industry has a significantly smaller average assets
size compared to the anchor comparison group, the anchor size standard,
or in rare cases one lower than the anchor, would be considered
appropriate.
3. Industry competition. Industry competition is generally assessed
by measuring the share of total industry receipts obtained by firms
that are among the largest in an industry. In this proposed rule, SBA
evaluates the share of industry receipts generated by the four largest
firms in the industry. This is referred to as the ``four-firm
concentration ratio.'' SBA then compares the four-firm concentration
ratio for an industry under review to the average four-firm
concentration ratio for industries in the anchor comparison group. If a
significant share of economic activity within the industry is
concentrated among a few relatively large companies, SBA would
establish a size standard relatively higher than the anchor size
standard. SBA would not consider the four-firm concentration ratio as
an important factor in assessing a size standard if its value for an
industry under review is less than 40 percent. For industries in which
the four largest firms account for 40 percent or more of an industry's
total receipts, SBA examines the average size of the four largest firms
in determining a size standard.
4. Distribution of firms by size. SBA examines the shares of
industry total receipts accounted for by firms of different receipts
and employment size classes in an industry. This is an additional
factor SBA evaluates in assessing competition within an industry. If
the preponderance of an industry's economic activity is attributable to
smaller firms, this would indicate that small businesses are
competitive in that industry and supports adopting the anchor size
standard. A size standard higher than the anchor size standard would be
supported for an industry in which the distribution of firms indicates
that most of the economic activity is concentrated among the larger
firms.
Concentration among firms is a measure of inequality of
distribution. To evaluate the degree of inequality of distribution
within an industry, SBA computes the Gini coefficient by constructing
the Lorenz curve. The Gini coefficient values vary between zero and
one. If receipts are distributed perfectly equally among all the firms
in an industry, the value of the Gini coefficient would equal to zero.
If an industry's total receipts are attributed to a single firm, the
Gini coefficient would equal to one.
[[Page 53944]]
SBA compares the degree of inequality of distribution for an
industry under review with that for industries in the anchor comparison
group. If an industry shows a higher degree of inequality of
distribution (i.e., higher Gini coefficient) compared to industries in
the anchor comparison industry group this would, all else being equal,
warrant a higher size standard than the anchor. Conversely, for
industries with similar or more equal distribution (i.e., similar or
lower Gini coefficient values) than the anchor group, the anchor
standard, or in some cases a standard lower than the anchor, would be
adopted.
5. Impact on SBA programs. SBA examines the possible impact a size
standard change may have on the level of Federal small business
assistance. This assessment most often focuses on the share of Federal
contracting dollars awarded to small businesses in the industry in
question. In general, if the share of Federal contracting dollars
awarded to small businesses in an industry that receives a significant
amount of Federal contracting dollars is significantly less than the
small business share of the industry's total receipts, a justification
would exist for considering a size standard higher than the existing
size standard. The disparity between the small business Federal market
share and industry-wide share may be attributed to a variety of
reasons, such as extensive administrative and compliance requirements
associated with Federal contracts, the different skill set required on
Federal contracts as compared to typical commercial contracting work,
and the size of contracting requirements of Federal customers. These,
as well as other factors, are likely to influence the type of firms
within an industry that compete for Federal contracts and, hence, the
firms receiving such contracts are expected to possess different
characteristics than the average characteristics for all firms in that
industry. By comparing the small business Federal contracting share
with the industry-wide small business share, SBA includes in its size
standards analysis the latest Federal contracting trends. This analysis
may indicate a size standard larger than the current standard.
For this proposed rule, SBA considered Federal procurement trends
in the size standards analysis only if (1) the small business share of
Federal contracting dollars is at least 10 percentage points lower than
the small business share of total industry receipts and (2) the amount
of total Federal contracting averages $100 million or more during
fiscal years 2006-2008 (the latest years for which complete Federal
procurement data are available). SBA has selected these thresholds
because they reflect a significant level of contracting in which a
revision to a size standard may have an impact on expanding small
business opportunities.
Another factor that SBA evaluates is the impact of a proposed size
standard on SBA's loan programs, that is, the volume of SBA guaranteed
loans within an industry and the size of firms obtaining those loans.
This factor is examined to assess whether the existing or the proposed
size standard for a particular industry may be restricting the level of
financial assistance to small firms in that industry. If the analysis
shows a reduction in financial assistance to small businesses, a higher
size standard would be supportable. If small businesses have already
been receiving significant amounts of financial assistance through
SBA's loan programs, or if the financial assistance has been provided
mainly to businesses that are much smaller in size than the existing
size standard, consideration of this factor for determining the size
standard may not be necessary.
Sources of Industry and Program Data
The primary source of data for SBA's industry analysis is a special
tabulation of the 2002 Economic Census (see https://www.census.gov/econ/census02/) prepared by the U.S. Bureau of the Census (Census Bureau)
for SBA. The special tabulation provides SBA with industry-specific
data on the number of firms, number of establishments, number of
employees, annual payroll and annual receipts of companies by the size
of firm reporting the data to Census. That is, the data are by the size
class of the total company; however, the data itself, within a
particular size class, represents the company's total data in that
industry only. The special tabulation enables SBA to evaluate average
firm size, the four-firm concentration ratio, and distribution of firms
by receipts and employment size.
In some cases, where Census data were not available due to
disclosure prohibitions, SBA either estimated missing values using
available relevant data or, examined data at a higher level of industry
aggregation, such as at the 2- or 3-digit NAICS level. In some
instances, SBA had to base its analysis only on those factors for which
data were available or missing values could be estimated. Data sources
and estimation procedures SBA uses in its size standards analysis are
documented in detail in the ``SBA Size Standards Methodology'' paper,
which is available at https://www.sba.gov/size.
Sales to total assets ratios used to calculate average assets size
are from the Risk Management Association's Annual Statement Studies,
2006-2008.
To evaluate Federal contracting trends, SBA examined Federal
contract award data for fiscal years 2006-2008 from the U.S. General
Service Administration's Federal Procurement Data System--Next
Generation (FPDS-NG). SBA's internal data on its guaranteed loan
programs for fiscal years 2006-2008 were analyzed to assess the impact
on financial assistance to small businesses.
Dominant in Field of Operation
Section 3(a) of the Small Business Act (15 U.S.C. 632(c)) defines a
small business concern as one that is (1) independently owned and
operated, (2) not dominant in its field of operation, and (3) within a
specific small business definition or size standard established by the
SBA Administrator. SBA considers as part of its evaluation of a size
standard whether a business concern at a proposed size standard would
be considered dominant in its field of operation. For this, SBA
generally examines the industry's market share of firms at the proposed
standard or other factors that may indicate whether a firm can exercise
a major controlling influence on a national basis in which significant
numbers of business concerns are engaged. If SBA's analysis indicates
that a proposed size standard would include a dominant firm, a lower
size standard would be considered to exclude the dominant firm from
being defined as small.
Selection of Size Standards
To simplify size standards, for the ongoing comprehensive size
standards review, SBA has proposed to select a size standard for an
industry from a limited number of receipts based size standard levels.
For many years, SBA has been concerned about the complexity of
determining small business status caused by a large number of varying
receipts based size standards (see 69 FR 13130, March 4, 2004, and 57
FR 62515, December 31, 1992). Currently, there are 32 different levels
of receipts based size standards, ranging from $0.75 million to $35.5
million, with many of those levels applying to one or just a few
industries only. SBA believes that such a large number of variations
with small variations are both unnecessary and difficult to justify
analytically. Simplifying the administration of SBA's
[[Page 53945]]
size standards to a fewer number of size standard levels will produce
more common size standards for businesses operating in multiple related
industries and greater consistency in the size standards among
industries that are similar in their economic characteristics.
This proposed rule, therefore, applies one of eight receipts based
size standards to each industry in Sector 81, Other Services. These
eight ``fixed'' size standard levels are $5 million, $7 million, $10
million, $14 million, $19 million, $25.5 million, $30.0 million and
$35.5 million. These eight receipts based size standard levels are
established by taking into consideration the minimum, maximum, and the
more commonly used receipts based size standards. Currently, the more
commonly used receipts based size standards cluster around the
following six levels -$2.5 million to $4.5 million, $7 million, $9.0
million to $10 million, $12.5 million to $14.0 million, $25.0 million
to $25.5 million, and $33.5 million to $35.5 million. SBA has selected
$7 million as one of eight fixed levels of receipts based size
standards because this is also an anchor standard for receipts based
standards. A lower or minimum receipts based size level is established
at $5 million. Excluding monetary standards for agriculture and those
based on net commissions (such as real estate brokers and travel
agents), $5 million is in the close neighborhood of the current minimum
receipts based standard of $4.5 million. Among the higher levels size
clusters, $10 million, $14 million, $25.5 million, and $35.5 million
are selected as other four levels of the fixed size standards. Because
of a large gap between two of the size standard intervals, SBA has
established intermediate levels of $19 million between $14 million and
$25.5 million, and $30 million between $25.5 million and $35.5 million.
These two intermediate size levels reflect roughly similar proportional
differences between the two successive size standard levels.
In a further effort to simplify size standards, SBA may propose a
common size standard for certain closely related group of industries.
Although the size standard analysis may support a specific size
standard level for each industry, SBA believes that establishing
different size standards for closely related industries may not be
appropriate. For example, in cases where many of the same businesses
operate in the same two industries, establishing the common size
standard would better reflect the industry marketplace than
establishing separate size standards for each of those industries. This
situation has led SBA to establish a common size standard for the
information technology (IT) services industries (NAICS 541511, NAICS
541112, NAICS 541513 and NAICS 541519), even though the industry data
might support a distinct size standard for each industry. Businesses
engaged in IT related services typically perform activities in two or
more other related industries. Consequently, SBA has continued to use a
common size standard for Computer and Office Machine Repair Maintenance
industry in the Other Services Sector (NAICS 811211) and Computer
Systems Design and Related Services sector (NAICS 541511-541519).
Whenever SBA proposes a common size standard for closely related
industries it will provide a justification for that in the proposed
rule.
Evaluation of Industry Structure
SBA has evaluated the structure of each industry in the Other
Services Sector to assess the appropriateness of the current size
standards. As described above, SBA compared data on the economic
characteristics of each industry in that Sector to the average
characteristics of industries in two comparison groups. The first
comparison group is comprised of all industries with $7.0 million size
standards--referred to as the ``receipts based anchor comparison
group.'' Because the goal of SBA's size review is to assess whether a
specific industry's size standard should be at or different from the
anchor size standard, this is the most logical set of industries to
group together for the industry analysis. In addition, this group
includes a sufficient number of firms to provide a meaningful
assessment and comparison of industry characteristics.
If the characteristics of an industry under review are similar to
the average characteristics of industries in the anchor comparison
group, the anchor size standard would be considered an appropriate
standard for that industry. If an individual industry's structure is
significantly different from that of the anchor group, a size standard
lower or higher than the anchor size standard would be selected. The
level of the new size standard is determined based on the difference
between the characteristics of the anchor comparison group and a second
industry comparison group. As described above, the second comparison
group for receipts based standards consists of industries with the
highest receipts based size standards, ranging from $23 million to
$35.5 million, with the average size standard for the group equaling
$29 million. SBA refers to this group of industries as the ``higher
level receipts based size standard comparison group.'' Differences in
industry structure between an industry under review and the industries
in the two comparison groups are determined by comparing data on each
of the industry factors, including average firm size, average assets
size, four-firm concentration ratio, and the Gini coefficient of
distribution of firms by size. Table 1 shows two measures of the
average firm size (simple and weighted), average assets size, four-firm
concentration ratio, average receipts of the four largest firms, and
the Gini coefficient for both anchor level and higher level comparison
groups for receipts based size standards.
Table 1--Average Characteristics of Receipts Based Comparison Groups
----------------------------------------------------------------------------------------------------------------
Avg. firm size ($
million) Avg. assets Avg. four-firm Avg. receipts
Receipts based comparison ---------------------- size ($ concentration of four largest Gini
group Simple Weighted million) ratio (%) firms ($ coefficient
Average Average million) \a\
----------------------------------------------------------------------------------------------------------------
Anchor Level................ 1.19 17.64 0.71 18.7 189.9 0.599
Higher Level................ 4.77 52.27 2.05 22.3 639.4 0.725
----------------------------------------------------------------------------------------------------------------
\a\ To be used for industries with a four-firm concentration ratio of 40% or greater.
[[Page 53946]]
Derivation of Size Standards Based on Industry Factors
For each of the industry factors shown in Table 1, SBA derives a
separate size standard based on the amount of differences between their
values for an industry under review and those for the two comparison
groups. An estimated size standard that is supported by each industry
factor is derived by comparing its value for a specific industry under
review to the corresponding value for the two comparison groups. If the
industry value for a particular factor is near that for the anchor
comparison group, the $7.0 million anchor size standard would be
considered appropriate for that factor.
If an industry's value for a factor is significantly above or below
the anchor comparison group value, a size standard above or below the
$7.0 million anchor size would be warranted. The level of the new size
standard in these cases is derived based on the proportional difference
between the industry value and the values for the two comparison
groups.
For example, if an industry's simple average receipts size equals
$3.0 million, SBA's analysis would support a size standard of $19
million. The $3.0 million level is 50.6 percent between the average
firm size of $1.19 million for the anchor comparison group and $4.77
million for the higher level comparison group (($3.00 million - $1.19
million) / ($4.77 million - $1.19 million) = 0.506 or 50.6%). This
proportional difference is applied to the difference between the $7.0
million anchor size standard and average size standard of $29 million
for the higher level size standard group and then added to $7.0 million
to estimate a size standard of $18.12 million ([{$29.0 million - $7.0
million{time} * 0.506] + $7.0 million = $18.12 million). The final
step rounds the estimated size standard of $18.12 million to the
nearest fixed size standard level, in this case to $19 million.
SBA applies the above method of calculation to derive a size
standard for each industry factor. Detailed formulas involved in these
calculations are presented in ``SBA Size Standards Methodology'' which
is available at https://www.sba.gov/size. Table 2 shows ranges of values
for each industry factor and the levels of size standards supported by
those values.
Table 2--Values of Industry Factors and Supported Size Standards
--------------------------------------------------------------------------------------------------------------------------------------------------------
Or if avg.
Or if weighted Or if avg. assets receipts of Or if Gini Then size standard
If simple avg. receipts size ($ million) avg. receipts size size ($ million) largest four firms coefficient is ($ million)
($ million) ($ million)
--------------------------------------------------------------------------------------------------------------------------------------------------------
<1.03............................................... <16.07 <0.65 <169.4 <0.593 5.0
1.03 to1.43......................................... 16.07 to 20.00 0.65 to 0.80 169.4 to 220.5 0.593 to 0.608 7.0
1.44 to 2.00........................................ 20.01 to 25.51 0.81 to 1.02 220.6 to 292.0 0.609 to 0.628 10.0
2.01 to 2.74........................................ 25.52 to 32.59 1.03 to 1.29 292.1 to 384.0 0.629 to 0.653 14.0
2.75 to 3.67........................................ 32.60 to 41.65 1.30 to 1.64 384.1 to 501.5 0.654 to 0.686 19.0
3.68 to 4.57........................................ 41.66 to 50.30 1.65 to 1.97 501.6 to 613.8 0.687 to 0.718 25.5
4.58 to 5.38........................................ 50.31 to 58.17 1.98 to 2.28 613.9 to 716.1 0.719 to 0.746 30.0
>5.38............................................... >58.17 >2.28 >716.1 >0.746 35.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table 3 shows the results of analyses of industry data and latest
Federal contracting trends for each industry in Sector 81, Other
Services. Each NAICS industry row in columns 2, 3, 4, 6, 7, and 8 shows
two numbers. The upper number is the value for the industry factor
shown on the top of the column, while the lower number is the size
standard supported by that factor. For the four-firm concentration
ratio, a size standard is estimated based on the average receipts of
the top four firms if its value is 40 percent or more. If the four-firm
concentration ratio for an industry is less than 40 percent, no size
standard is estimated for that factor and column 5 is left blank. The
value for Federal contracting factor in column 8 is shown only for
industries that averaged $100 million or more annually in Federal
contracting dollars during fiscal years 2006-2008. A size standard for
that factor is derived only if the small business share of total
Federal contracting dollars is 10 percentage points less than the small
business share of industry's total receipts. Otherwise column 8 is also
left blank. Column 9 shows the proposed or revised size standard for
each industry in the Other Services Sector, calculated as the average
of size standards supported by each industry factor and rounded to the
nearest fixed size level. Analytical details involved in the averaging
procedure are described in the SBA ``Size Standards Methodology'' paper
which is available at https://www.sba.gov/size. For comparison, the
current size standards for industries in Sector 81 are also shown in
column 10 of Table 3.
Table 3--Size Standards Supported by Each Industry Factor
[In millions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
(8)
(2) Simple (3) (4) (5) Four- (6) Four- (7) Gini Federal (9) (10)
(1) NAICS average Weighted Average firm firm coefficient contract Revised Current
firm size average assets ratio average factor size size
firm size size (%) size (%) standard standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
811111............................................ $0.4 $1.3 $0.1 1.9 $150.8 0.154 ......... $5.0 $7.0
General Automotive Repair......................... $5.0 $5.0 $5.0 ......... ......... $5.0 ......... ......... .........
811112............................................ $0.4 $1.4 $0.1 4.6 $14.3 0.142 ......... $5.0 $7.0
Automotive Exhaust System Repair.................. $5.0 $5.0 $5.0 ......... ......... $5.0 ......... ......... .........
811113............................................ $0.4 $1.0 ......... ......... ......... 0.066 ......... $5.0 $7.0
Automotive Transmission Repair.................... $5.0 $5.0 ......... ......... ......... $5.0 ......... ......... .........
811118............................................ $0.4 $2.0 $0.1 5.8 $39.5 0.210 -86.6 $7.0 $7.0
[[Page 53947]]
Other Automotive Mechanical and Electrical Repair $5.0 $5.0 $5.0 ......... ......... $5.0 $14.0 ......... .........
and Maintenance..................................
811121............................................ $0.7 $2.3 $0.2 2.5 $142.2 0.252 ......... $5.0 $7.0
Automotive Body, Paint, and Interior Repair and $5.0 $5.0 $5.0 ......... ......... $5.0 ......... ......... .........
Maintenance......................................
811122............................................ $0.8 $51.3 $0.3 27.6 $260.8 0.533 ......... $10.0 $7.0
Automotive Glass Replacement Shops................ $5.0 $30.0 $5.0 ......... ......... $5.0 ......... ......... .........
811191............................................ $0.8 $13.2 ......... 17.3 $169.5 0.473 ......... $5.0 $7.0
Automotive Oil Change and Lubrication Shops....... $5.0 $5.0 ......... ......... ......... $5.0 ......... ......... .........
811192............................................ $0.4 $2.0 $0.5 6.1 $78.2 0.262 ......... $5.0 $7.0
Car Washes........................................ $5.0 $5.0 $5.0 ......... ......... $5.0 ......... ......... .........
811198............................................ $0.7 $11.8 $0.2 24.0 $95.6 0.535 -18.5 $7.0 $7.0
All Other Automotive Repair and Maintenance....... $5.0 $5.0 $5.0 ......... ......... $5.0 $10.0 ......... .........
811211............................................ $0.4 $6.9 ......... 27.4 $101.7 0.482 ......... $5.0 $7.0
Consumer Electronics Repair and Maintenance....... $5.0 $5.0 ......... ......... ......... $5.0 ......... ......... .........
811212............................................ $1.2 $18.1 $0.4 22.4 $356.8 0.678 -25 $14.0 $25.0
Computer and Office Machine Repair and Maintenance $7.0 $7.0 $5.0 ......... ......... $19.0 $30.0 ......... .........
811213............................................ $1.3 $11.5 ......... ......... ......... 0.587 -38.0 $10.0 $7.0
Communication Equipment Repair and Maintenance.... $7.0 $5.0 ......... 23.8 $120.5 $5.0 $14.0 ......... .........
811219............................................ $1.9 $30.6 $0.8 42.4 $540.1 0.731 -11.6 $19.0 $7.0
Other Electronic and Precision Equipment Repair $10.0 $14.0 $7.0 ......... $25.5 $30.0 $10.0 ......... .........
and Maintenance..................................
811310............................................ $0.8 $6.5 $0.3 4.8 $233.8 0.494 -27.4 $7.0 $7.0
Commercial and Industrial Machinery and Equipment $5.0 $5.0 $5.0 ......... ......... $5.0 10.0 ......... .........
(except Automotive and Electronic) Repair and
Maintenance......................................
811411............................................ $0.3 $0.6 ......... 3.7 $6.0 0.064 ......... $5.0 $7.0
Home and Garden Equipment Repair and Maintenance.. $5.0 $5.0 ......... ......... ......... $5.0 ......... ......... .........
811412............................................ $0.8 $52.4 $0.2 0.0 $0.0 0.646 ......... $14.0 $7.0
Appliance Repair and Maintenance.................. $5.0 $30.0 $5.0 ......... ......... $14.0 ......... ......... .........
811420............................................ $0.2 $0.7 ......... 2.1 $6.8 0.067 ......... $5.0 $7.0
Reupholstery and Furniture Repair................. $5.0 $5.0 ......... ......... ......... $5.0 ......... ......... .........
811430............................................ $0.1 $0.5 ......... 7.7 $3.6 0.044 ......... $5.0 $7.0
Footwear and Leather Goods Repair................. $5.0 $5.0 ......... ......... ......... $5.0 ......... ......... .........
811490............................................ $0.3 $1.6 $0.1 0.0 $0.0 0.263 ......... $5.0 $7.0
Other Personal and Household Goods Repair and $5.0 $5.0 ......... ......... ......... $5.0 ......... ......... .........
Maintenance......................................
812111............................................ $0.1 $7.7 ......... 16.2 $20.4 0.207 ......... $5.0 $7.0
Barber Shops...................................... $5.0 $5.0 ......... ......... ......... $5.0 ......... ......... .........
812112............................................ $0.2 $23.0 $0.1 10.4 $391.6 0.246 ......... $5.0 $7.0
Beauty Salons..................................... $5.0 $10.0 $5.0 ......... ......... $5.0 ......... ......... .........
812113............................................ $0.1 $0.3 ......... 1.9 $4.2 0.019 ......... $5.0 $7.0
Nail Salons....................................... $5.0 $5.0 ......... ......... ......... $5.0 ......... ......... .........
812191............................................ $1.3 $101.0 ......... 60.2 $253.9 0.802 ......... $19.0 $7.0
Diet and Weight Reducing Centers.................. $7.0 $35.5 ......... ......... $10.0 35.5 ......... ......... .........
812199............................................ $0.2 $1.8 ......... 5.5 $27.5 0.175 ......... $5.0 $7.0
Other Personal Care Services...................... $5.0 $5.0 ......... ......... ......... $5.0 ......... ......... .........
812210............................................ $1.0 $48.9 $0.6 19.4 $536.7 0.353 ......... $7.0 $7.0
Funeral Homes and Funeral Services................ $5.0 $25.5 $5.0 ......... ......... $5.0 ......... ......... .........
812220............................................ $0.7 $54.8 $1.4 36.6 $295.8 0.668 ......... $19.0 $7.0
Cemeteries and Crematories........................ $5.0 $30.0 $19.0 ......... ......... $19.0 ......... ......... .........
[[Page 53948]]
812310............................................ $0.3 $36.3 $0.2 28.6 $247.6 0.427 ......... $7.0 $7.0
Coin-Operated Laundries and Drycleaners........... $5.0 $19.0 $5.0 ......... ......... $5.0 ......... ......... .........
812320............................................ $0.3 $1.7 $0.1 2.6 $50.9 0.187 ......... $5.0 $4.5
Drycleaning and Laundry Services (except Coin- $5.0 $5.0 $5.0 ......... ......... $5.0 ......... ......... .........
Operated)........................................
812331............................................ $3.9 $38.3 $1.9 31.6 $243.8 0.768 ......... $30.0 $14.0
Linen Supply...................................... $25.5 $19.0 $25.5 ......... ......... $35.5 ......... ......... .........
812332............................................ $9.7 $157.3 $5.7 61.1 $938.1 0.864 ......... $35.5 $14.0
Industrial Launderers............................. $35.5 $35.5 $35.5 ......... $35.5 $35.5 ......... ......... .........
812910............................................ $0.2 $2.0 ......... 6.3 $23.3 0.118 ......... $5.0 $7.0
Pet Care (except Veterinary) Services............. $5.0 $5.0 ......... ......... ......... $5.0 ......... ......... .........
812921............................................ $1.7 $103.5 $0.7 45.3 $354.3 0.725 ......... $19.0 $7.0
Photo Finishing Laboratories (except One-Hour).... $10.0 $35.5 $7.0 ......... $14.0 $30.0 ......... ......... .........
812922............................................ $0.5 $74.5 ......... 34.0 $61.3 0.391 ......... $14.0 $7.0
One-Hour Photo Finishing.......................... $5.0 $35.5 ......... ......... ......... $5.0 ......... ......... .........
812930............................................ $2.8 $122.2 $2.7 47.4 $819.1 0.833 ......... $35.5 $7.0
Parking Lots and Garages.......................... $19.0 $35.5 $35.5 ......... $35.5 $35.5 ......... ......... .........
812990............................................ $0.4 $11.8 $0.2 19.7 $248.3 0.422 ......... $5.0 $7.0
All Other Personal Services....................... $5.0 $5.0 $5.0 ......... ......... $5.0 ......... ......... .........
813211............................................ $3.5 $47.6 $15.0 15.3 $1,021.8 0.795 ......... $30.0 $7.0
Grantmaking Foundations........................... $19.0 $25.5 $35.5 ......... ......... $35.5 ......... ......... .........
813212............................................ $3.1 $18.4 $2.3 24.0 $464.2 0.730 ......... $25.5 $7.0
Voluntary Health Organizations.................... $19.0 $7.0 $35.5 ......... ......... $30.0 ......... ......... .........
813219............................................ $4.7 $84.5 ......... 14.6 $432.8 0.821 ......... $35.5 $7.0
Other Grant Making and Giving Services............ $30.0 $35.5 ......... ......... ......... 35.5 ......... ......... .........
813311............................................ $2.3 $189.8 ......... 46.5 $460.7 0.794 ......... $25.5 $7.0
Human Rights Organizations........................ $14.0 $35.5 ......... ......... $19.0 35.5 ......... ......... .........
813312............................................ $1.1 $43.6 $1.5 22.8 $249.5 0.644 ......... $14.0 $7.0
Environment, Conservation and Wildlife $7.0 $25.5 $19.0 ......... ......... 14.0 ......... ......... .........
Organizations....................................
813319............................................ $0.8 $8.2 $0.7 11.8 $109.9 0.537 ......... $5.0 $7.0
Other Social Advocacy Organizations............... $5.0 $5.0 $7.0 ......... ......... $5.0 ......... ......... .........
813410............................................ $0.5 $5.7 $0.7 2.6 $96.4 0.393 ......... $5.0 $7.0
Civic and Social Organizations.................... $5.0 $5.0 $7.0 ......... ......... $5.0 ......... ......... .........
813910............................................ $1.0 $13.8 $0.9 3.9 $168.7 0.601 ......... $7.0 $7.0
Business Associations............................. $7.0 $5.0 $10.0 ......... ......... $7.0 ......... ......... .........
813920............................................ $1.6 $17.2 $1.6 6.4 $176.6 0.672 ......... $14.0 $7.0
Professional Organizations........................ $10.0 $7.0 $19.0 ......... ......... $19.0 ......... ......... .........
813990............................................ $0.7 $19.0 $0.8 8.3 $315.6 0.465 ......... $7.0 $7.0
Other Similar Organizations (except Business, $5.0 $7.0 $10.0 ......... ......... $5.0 ......... ......... .........
Professional, Labor, and Political Organizations)
--------------------------------------------------------------------------------------------------------------------------------------------------------
As can be seen in Table 3, the results of SBA analyses of industry
and Federal contracting data would support reducing the current size
standards for 20 of 48 industries in the Other Services Sector.
However, SBA believes that lowering size standard for those industries
would not be in the best interests of small businesses in these
difficult times when the economy is in a deep recession.
Aiming to promote economic recovery and to preserve and create jobs
the U.S. Congress passed and the President signed the American Recovery
and Reinvestment Act of 2009 (Recovery Act). The purposes and goals of
the Recovery Act are to promote economic recovery and to preserve and
create jobs.
Under the Recovery Act, SBA has changed its various programs to
assist small businesses, including the following: (1) Temporary
reduction or elimination of fees in the 7(a) and 504 loan guarantee
programs; (2) creation of a temporary 90 percent guarantee loan
program; (3) creation of a temporary Secondary Market Guarantee
Authority to provide a Federal guarantee for pools of first lien 504
loans that are to be sold to third-party investors; (4) new authority
for refinancing community development loans under the 504 program; (5)
revision of the job creation goals of the 504 program; (6)
simplification of the maximum leverage limits and aggregate investment
limits required of Small Business Investment Companies; (7) temporary
authority to provide loans on a deferred basis to viable small business
concerns that have a qualifying small business loan and are
experiencing immediate financial hardship; (8) temporary increase in
the surety bond maximum amount; (9)
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establishment of a Secondary Market Lending Authority to make loans to
systemically important broker dealers in SBA's 7(a) secondary market;
and 10) application of SBA's Certified Development Company (CDC)
alternative size standard to its 7(a) Business Loan Program (see 13 CFR
121.301).
SBA believes that to reduce size standards and thereby reduce
eligibility for those programs, or to reduce the number of firms that
can participate in financial and Federal contracting assistance
programs would run counter to what it is trying to do for small
businesses. Reducing size eligibility for Federal contracting
opportunities would not preserve or create more jobs; rather, it would
have the opposite effect. Therefore, SBA has decided not to propose to
reduce the size standards for those industries. SBA has decided to
retain the current size standards for those industries. Further, SBA
does not anticipate that it will propose to lower size standards after
the Recovery Act terminates on September 30, 2010. SBA intends for the
proposed size standards, if adopted, to remain in effect unless and
until it receives information or data that suggests a change is needed.
Evaluation of Federal Contracting and SBA Loan Data
Besides industry structure, SBA also evaluates Federal contracting
data to assess the extent to which small businesses are successful in
getting Federal contracts under the existing size standards. However,
the available data on Federal contracting are limited to identifying
businesses as small or other than small, with no information on exact
size of businesses receiving Federal contracts in order to conduct a
more precise analysis.
Given limited data, for the current comprehensive size review, SBA
has decided to designate a size standard at one level higher than their
current size standard for industries where the small business share of
total Federal contracting dollars is between 10 and 30 percentage
points lower than their shares in total industry receipts and at two
levels higher than the current size standard if the difference is
higher than 30 percentage points.
SBA has chosen not to designate a size standard for the Federal
contracting factor alone that is higher than two levels above the
current size standard because doing so would result in most cases of
designating a size standard more than twice the current size standard.
Given the limitations of the FPDS data, and the complex relationships
among a number of variables affecting small business participation in
the Federal marketplace, SBA believes that a larger adjustment to size
standards based on Federal contracting activity should be based on a
more detailed analysis of the impact of any subsequent revision to the
current size standard. In limited situations, however, SBA may conduct
a more extensive examination of Federal contracting experience to
support a different size standard than indicated by this general rule
to take into consideration significant and unique aspects of small
business competitiveness in the Federal contract market. SBA welcomes
comment on its methodology of incorporating the Federal contracting
factor in the size standard analysis and suggestions for alternative
methods and other relevant information on small business experience in
the Federal contract market.
Five industries in Sector 81, Other Services, received an average
of $100 million or more annually in Federal contracting dollars during
fiscal years 2006-2008. These industries include NAICS 811118, NAICS
811198, NAICS 811213, NAICS 811219, and NAICS 811310. Those are the
industries that have a Federal contracting factor in column 8 of Table
3. In each of these five industries, the small business share of
Federal contracting dollars was more than 10 percentage points lower
than small business share of industry's total receipts. Therefore, as
shown in Table 3, a separate size standard was estimated for the
Federal contracting factor for industries. In all cases, the estimated
size standard for the Federal contracting market was higher than the
current standard. The latest data show that Federal contracting
activity is insignificant for most of the industries in Sector 81 and,
for a few industries where it is significant, small businesses seem to
be struggling in the Federal marketplace relative to their share in
industry's total sales.
Before deciding on an industry's size standard, SBA also considers
the impact of new or revised standards on SBA's loan programs. SBA
examined 7(a) Loan Program data for fiscal years 2006-2008 to assess
whether the existing or proposed size standards need further
adjustments to ensure credit opportunities for small businesses though
that program. For the Other Services industries, primarily small
businesses that are much smaller than the current size standards use
the 7(a) Loan Program. Based on that analysis and SBA's decision not to
reduce any size standards in the proposed rule under the current
economic conditions, no size standard needs an adjustment.
Other Considerations
SBA has decided not to review the size standard for NAICS 811212,
the Computer and Office Machine Repair and Maintenance industry, at
this time and will continue to apply the current $25 million size
standard. The history of the Computer and Office Machine Repair
industry explains the reasons for this decision. Under the former
Standard Industrial Classification (SIC) System, SBA had established a
common size standard for all industries in Sector 737, ``Computer
Programming, Data Processing, and Other Computer Related Services'' (56
FR 38364, August 13, 1991 and 57 FR 27907, June 23, 1992). In 1997, the
NAICS replaced the SIC System and moved most of the industries in
Sector 737 industry to the Sector 54, ``Professional, Scientific, and
Technical Services.'' However, the Computer Maintenance and Repair
activity was moved to Sector 81 and was combined with Computer and
Office Machine Repair Maintenance services to form NAICS 811212.
Because Computer Maintenance and Repair was the largest component of
the new industry, SBA continued to apply the size standard for computer
services (64, FR 57188. October 22, 1999 and 65 FR 30836, May 15,
2000). SBA continues to believe that a common size standard should
apply to all of the computer services related industries.
SBA plans to analyze the industries within the NAICS Sector 54 in
the near future and will examine at that time whether to retain the
current $25 million size standard for the Computer Service
