Surety Bond Guarantee Program; Size Standards, 48549-48550 [2010-19741]

Agencies

• SMALL BUSINESS ADMINISTRATION

[Federal Register Volume 75, Number 154 (Wednesday, August 11, 2010)]
[Rules and Regulations]
[Pages 48549-48550]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-19741]



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Federal Register / Vol. 75, No. 154 / Wednesday, August 11, 2010 / 
Rules and Regulations

[[Page 48549]]



SMALL BUSINESS ADMINISTRATION

13 CFR Part 121

RIN 3245-AG10


Surety Bond Guarantee Program; Size Standards

AGENCY: U.S. Small Business Administration.

ACTION: Direct final rule.

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SUMMARY: The U.S. Small Business Administration (SBA) is issuing this 
direct final rule to permanently adopt the temporary size standard 
implemented under the American Recovery and Reinvestment Act that is 
now in effect through September 30, 2010 for the Surety Bond Guarantee 
Program. The direct final rule provides that a business concern is 
small if such concern, combined with its affiliates, does not exceed 
the size standard for the North American Industry Classification System 
(NAICS) code that corresponds to the primary industry of the business 
concern combined with its affiliates.

DATES: This direct final rule is effective October 1, 2010 without 
further action, unless significant adverse comment is received by 
September 10, 2010. If significant adverse comment is received, SBA 
will publish a timely notice in the Federal Register to withdraw this 
direct final rule.

ADDRESSES: You may submit comments, identified by RIN 3245-AG10 by any 
of the following methods:
     Federal eRulemaking Portal: 
http:[sol][sol]www.regulations.gov. Follow the instructions for 
submitting comments.
     Mail: Office of Surety Guarantees, Suite 8600, 409 Third 
Street, SW., Washington, DC 20416.
     Hand Delivery/Courier: Office of Surety Guarantees, 409 
Third Street, SW., Washington DC 20416.
    SBA will post all comments on http:[sol][sol]www.regulations.gov. 
If you wish to submit confidential business information (CBI) as 
defined in the User Notice at http:[sol][sol]www.regulations.gov, 
please submit information to Ms. Barbara Brannan, Special Assistant, 
Office of Surety Guarantees, 409 Third Street, SW., Washington, DC 
20416 or send an e-mail to Barbara.brannan@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 whether it will publish 
the information.

FOR FURTHER INFORMATION CONTACT: Ms. Barbara Brannan, Office of Surety 
Guarantees, 202-205-6545, e-mail: Barbara.brannan@sba.gov.

SUPPLEMENTARY INFORMATION:

I. Background Information

    The Administrator of the Small Business Administration (SBA) is 
authorized to establish size standards by which a business concern may 
be determined to be a small business concern for purposes of the Small 
Business Act and any other Act. 15 USC 632(a)(2)(A). The SBA 
Administrator is generally required to ensure that size standards vary 
from industry to industry to the extent necessary to reflect the 
differing characteristics of the various industries. 15 U.S.C. 
632(a)(2)(A).
    Prior to the American Recovery and Reinvestment Act of 2009, Public 
Law 111-5 (Recovery Act), a business concern was deemed small under the 
Surety Bond Guarantee Program (SBG) if: (1) With respect to any 
construction (general or special trade) concern or concern performing a 
contract for services, its average annual receipts, together with its 
affiliates, did not exceed $7 million (except as provided in (3) 
below); (2) with respect to any concern not specified in (1) above, the 
business concern met the size standard for the primary industry in 
which it, combined with its affiliates, was engaged; or (3) with 
respect to any construction (general or special trade) concern or 
concern performing a contract for services in the Presidentially-
declared disaster areas resulting from the 2005 Hurricanes Katrina, 
Rita or Wilma, the business concern, together with its affiliates, met 
either the size standard for the primary industry in which it, together 
with its affiliates, was engaged, or the size standard set forth in (1) 
above, whichever was higher.
    As required by section 508(c) of the Recovery Act, SBA amended its 
regulations with respect to the Surety Bond Guarantee Program to 
provide that, notwithstanding the size standards set forth above, from 
February 19, 2009, through September 30, 2010, a business concern would 
be eligible for assistance under the SBG Program only if it, together 
with its affiliates, did not exceed the size standard for the primary 
industry in which the business concern, together with its affiliates, 
was engaged. This change temporarily raised the size standard for many 
firms in the construction and service industries because, as described 
in (1) above, the size standard for most construction and service firms 
seeking surety bond guarantees prior to the Recovery Act was $7 
million. SBA has decided to permanently adopt the Recovery Act size 
standard. Without this action, approximately 8% of the businesses that 
qualified for assistance under the Recovery Act provision in fiscal 
year 2010 would be ineligible for bond guarantees after September 30, 
2010, and the lack of access to bonding would jeopardize the continuity 
and growth of these businesses.
    In addition, from February 17, 2009, until now, firms in service 
industries with size standards lower than $7 million lost their 
eligibility for surety bond guarantees if their annual revenue exceeded 
the size standard for the industry in which the firm, together with its 
affiliates, was engaged. This change only affected service industry 
concerns because all construction size standards are $7 million or 
higher. Although SBA does not anticipate that many firms wishing to 
provide services in the Presidentially-declared disaster areas 
resulting from Hurricanes Katrina, Rita or Wilma would be adversely 
affected by eliminating the alternative $7 million size standard under 
(3) above, SBA has decided to retain this option to ensure that no firm 
wishing to do such business would be denied assistance through the SBG 
Program. For purposes of surety bonds in connection with these 
contracts, a concern will continue to be small if the concern, together 
with its affiliates, meets the size standard for the primary industry 
in which it, together with its affiliates, is engaged, or if its 
average

[[Page 48550]]

annual receipts do not exceed $7 million, whichever is higher.
    In accordance with 13 CFR 121.302(a), this rule will apply to 
applications for surety bond guarantees accepted for processing by SBA 
on or after October 1, 2010.

II. Consideration of Comments

    SBA believes that this direct final rule is non-controversial since 
it simply adopts the temporary size standard established for the Surety 
Bond Guarantee Program under the Recovery Act, and would make the 
Surety Bond Guarantee Program size eligibility criteria consistent with 
SBA industry based standards. SBA also notes that it received no 
adverse comments to the temporary size standard that was published in 
the Federal Register on July 22, 2009 (74 FR 36110), and anticipates no 
significant adverse comments to this direct final rule. If SBA receives 
any significant adverse comments, it will publish a notice in the 
Federal Register for a timely withdrawal of this direct final rule.

Section Analysis

    Section 121.301(d). SBA is permanently adopting a temporary 
provision of the American Recovery and Reinvestment Act of 2009 that 
specifies that a concern is small if it, together with its affiliates, 
meets the size standard corresponding to the NAICS code for the primary 
industry in which it, together with its affiliates, is engaged. This 
direct final rule will make the SBG Program size eligibility criteria 
consistent with SBA industry based standards. It will expand the scope 
of eligible small businesses and will enable SBA to assist more small 
businesses to obtain the bonding necessary for them to bid on and 
perform contracts. SBA is retaining the $7 million alternative size 
standard for construction or services contracts performed in the 
Presidentially-declared disaster areas resulting from the 2005 
Hurricanes Katrina, Rita or Wilma.

Compliance With Executive Orders 12866, 12988, and 13132, the Paperwork 
Reduction Act (44 U.S.C. Chapter 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 
direct final rule does not constitute a significant regulatory action 
under Executive Order 12866. This rule is also not a major rule under 
the Congressional Review Act.
Executive Order 12988
    This action meets applicable standards set forth in Sections 3(a) 
and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize 
litigation, eliminate ambiguity, and reduce burden. The action does not 
have retroactive or preemptive effect.
Executive Order 13132
    For purposes of Executive Order 13132, SBA has determined that this 
direct final rule will not have substantial, direct effects on the 
States, on the relationship between the national government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government. Therefore, for the purpose of Executive 
Order 13132, Federalism, SBA has determined that this direct final rule 
has no federalism implications warranting preparation of a federalism 
assessment.
Paperwork Reduction Act, 44 U.S.C., Chapter 35
    SBA has determined that this direct final rule does not impose 
additional reporting or recordkeeping requirements under the Paperwork 
Reduction Act, 44 U.S.C., Chapter 35.
Regulatory Flexibility Act, 5 U.S.C. 601-612
    The Regulatory Flexibility Act (RFA), 5 U.S.C. 601, requires 
administrative agencies to consider the effect of their actions on 
small entities, small non-profit enterprises, and small local 
governments. Pursuant to RFA, when an agency issues a rulemaking, the 
agency must prepare a regulatory flexibility analysis which describes 
the impact of this rule on small entities. However, section 605 of the 
RFA allows an agency to certify a rule, in lieu of preparing an 
analysis, if the rulemaking is not expected to have a significant 
economic impact on a substantial number of small entities. Within the 
meaning of RFA, SBA certifies that this rule will not have a 
significant economic impact on a substantial number of small entities. 
There are 18 Sureties that participate in the SBG Program, and no part 
of this direct final rule would impose any significant additional cost 
or burden on them.

List of Subjects in 13 CFR Part 121

    Administrative practice and procedure, Government procurement, Loan 
programs--business, Reporting and recordkeeping requirements, Small 
businesses.

0
For the reasons stated in the preamble, SBA amends 13 CFR part 121 as 
follows:

PART 121--SMALL BUSINESS SIZE REGULATIONS

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

    Authority:  15 U.S.C. 632, 634(b)(6), 636(b), 637(a), 644, 
662(5) and 694a; Pub. L. 105-135, sec. 401 et seq., 111 Stat. 2592.


0
2. Amend Sec.  121.301 by revising paragraph (d) to read as follows:


Sec.  121.301  What size standards are applicable to financial 
assistance programs?

* * * * *
    (d) For Surety Bond Guarantee assistance--
    (1) A business concern, combined with its affiliates, must meet the 
size standard for the primary industry in which such business concern, 
combined with its affiliates, is engaged.
    (2) For any contract or subcontract, public or private, to be 
performed in the Presidentially-declared disaster areas resulting from 
the 2005 Hurricanes Katrina, Rita or Wilma, a construction (general or 
special trade) concern or concern performing a contract for services is 
small if it meets the size standard set forth in paragraph (d)(1) of 
this section, or the average annual receipts of the concern, together 
with its affiliates, do not exceed $7 million, whichever is higher.
* * * * *

    Dated: August 5, 2010.
Karen G. Mills,
Administrator.
[FR Doc. 2010-19741 Filed 8-10-10; 8:45 am]
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