Small Business Size Standards: Health Care and Social Assistance, 11001-11017 [2012-4329]
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Federal Register / Vol. 77, No. 37 / Friday, February 24, 2012 / Proposed Rules
minimum efficiency level determined
by linear interpolation of the kVA and
efficiency values immediately above
and below that kVA rating.
Single-phase
Three-phase
BIL*
20–45 kV
46–95 kV
≥96 kV
BIL*
20–45 kV
46–95 kV
≥96 kV
kVA
Efficiency
(%)
Efficiency
(%)
Efficiency
(%)
kVA
Efficiency
(%)
Efficiency
(%)
Efficiency
(%)
15 .................
25 .................
37.5 ..............
50 .................
75 .................
100 ...............
167 ...............
250 ...............
333 ...............
500 ...............
667 ...............
833 ...............
98.10
98.33
98.49
98.60
98.73
98.82
98.96
99.07
99.14
99.22
99.27
99.31
97.86
98.12
98.30
98.42
98.57
98.67
98.83
98.95
99.03
99.12
99.18
99.23
..........................
..........................
..........................
..........................
98.53
98.63
98.80
98.91
98.99
99.09
99.15
99.20
15
30
45
75
112.5
150
225
300
500
750
1000
1500
2000
2500
97.50
97.90
98.10
98.33
98.52
98.65
98.82
98.93
99.09
99.21
99.28
99.37
99.43
99.47
97.18
97.63
97.86
98.13
98.36
98.51
98.69
98.81
98.99
99.12
99.20
99.30
99.36
99.41
..........................
..........................
..........................
..........................
..........................
..........................
98.57
98.69
98.89
99.02
99.11
99.21
99.28
99.33
* BIL means basic impulse insulation level.
Note: All efficiency values are at 50 percent of nameplate rated load, determined according to the DOE Test-Procedure. 10 CFR Part 431,
Subpart K, Appendix A.
Issued in Washington, DC, on February 15,
2012.
Kathleen B. Hogan,
Deputy Assistant Secretary, Energy Efficiency
and Renewable Energy.
[FR Doc. 2012–3987 Filed 2–23–12; 8:45 am]
BILLING CODE 6450–01–P
SMALL BUSINESS ADMINISTRATION
13 CFR Part 121
RIN 3245–AG30
Small Business Size Standards: Health
Care and Social Assistance
U.S. Small Business
Administration.
ACTION: Proposed rule.
AGENCY:
The U.S. Small Business
Administration (SBA) proposes to
increase small business size standards
for 28 industries in North American
Industry Classification System (NAICS)
Sector 62, Health Care and Social
Assistance. As part of its ongoing
comprehensive review of all size
standards, SBA has evaluated all size
standards in NAICS Sector 62 to
determine whether the existing size
standards should be retained or revised.
This proposed rule is one of a series of
proposed rules that will review size
standards of industries grouped by
NAICS Sector. SBA issued a White
Paper entitled ‘‘Size Standards
Methodology’’ and published a notice in
the October 21, 2009 issue of the
Federal Register that the ‘‘Size
Standards Methodology’’ White Paper
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SUMMARY:
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was available on its Web site at
www.sba.gov/size for public review and
comments (74 FR 53940). The ‘‘Size
Standards Methodology’’ White Paper
explains how SBA establishes, reviews,
and modifies its receipts based and
employee based small business size
standards. In this proposed rule, SBA
has applied its methodology that
pertains to establishing, reviewing, and
modifying a receipts based size
standard.
DATES: SBA must receive comments to
this proposed rule on or before April 24,
2012.
ADDRESSES: You may submit comments,
identified by RIN 3245–AG30 by one of
the following methods: (1) Federal
eRulemaking Portal:
www.regulations.gov, following the
instructions for submitting comments;
or (2) Mail/Hand Delivery/Courier:
Khem R. Sharma, Ph.D., Chief, Size
Standards Division, 409 Third Street
SW., Mail Code 6530, Washington, DC
20416. SBA will not accept comments to
this proposed rule submitted by email.
SBA will post all comments to this
proposed rule without change on
www.regulations.gov. If you wish to
submit confidential business
information (CBI) as defined in the User
Notice at www.regulations.gov, you
must submit such information to U.S.
Small Business Administration, Khem
R. Sharma, Ph.D., Chief, 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
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information as confidential. SBA will
review your information and determine
whether it will make the information
public or not.
FOR FURTHER INFORMATION CONTACT:
Khem R. Sharma, Ph.D., Chief, Size
Standards Division, (202) 205–6618 or
sizestandards@sba.gov.
To
determine eligibility for Federal small
business assistance, SBA establishes
small business size definitions (referred
to as size standards) for private sector
industries in the United States. SBA
uses two primary measures of business
size: average annual receipts and
average number of employees. SBA uses
financial assets, electric output, and
refining capacity to measure the size of
a few specialized industries. In
addition, SBA’s Small Business
Investment Company (SBIC), Certified
Development Company (504), and 7(a)
Loan Programs use either the industry
based size standards or net worth and
net income based alternative size
standards to determine eligibility for
those programs. At the beginning of the
current comprehensive size standards
review, there were 41 different size
standards covering 1,141 NAICS
industries and 18 sub-industry activities
(referred to as ‘‘exceptions’’ in SBA’s
table of size standards). Thirty-one of
these size levels were based on average
annual receipts, seven were based on
average number of employees, and three
were based on other measures.
Over the years, SBA has received
comments that its size standards have
not kept up with changes in the
SUPPLEMENTARY INFORMATION:
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economy, in particular the changes in
the Federal contracting marketplace and
industry structure. The last time SBA
conducted a comprehensive review of
all size standards was during the late
1970s and early 1980s. Since then, most
reviews of size standards were limited
to a few specific industries in response
to requests from the public and Federal
agencies. SBA also reviews the effect of
inflation on its size standards and
makes necessary adjustments to its
monetary based size standards at least
once every five years. SBA’s latest
inflation adjustment to size standards
was published in the Federal Register
on July 18, 2008 (73 FR 41237).
SBA proposed new size standards for
a number of industries in NAICS Sector
62 on May 4, 1999 (64 FR 23798), when
the Standard Industrial Classification
(SIC) System was in use. Subsequently,
effective October 1, 2000, SBA adopted
NAICS as the basis for small business
size standards, thereby replacing the SIC
System. Therefore, when SBA issued a
final rule on November 17, 2000 (65 FR
69432), the adopted size standards in
the final rule were based on the NAICS.
The industries that are now in NAICS
Subsector 621(Ambulatory Health Care
Services), NAICS Subsector 622
(Hospitals), and NAICS Subsector 623
(Nursing and Residential Care Facilities)
were part of SIC Major Industry Group
80, Health Services, while industries
now in NAICS Subsector 624 (Social
Assistance) were part of the SIC Major
Industry Group 83, Social Services.
Because of changes in the Federal
marketplace and industry structure
since the last comprehensive size
standards review, SBA recognizes that
current data may no longer support
some of its existing size standards.
Accordingly, in 2007, SBA began a
comprehensive review of all size
standards to determine if they are
consistent with current data, and to
adjust them when necessary. In
addition, on September 27, 2010, the
President of the United States signed the
Small Business Jobs Act of 2010 (Jobs
Act). The Jobs Act directs SBA to
conduct a detailed review of all size
standards and to make appropriate
adjustments to reflect market conditions
(Sec. 1344, Pub. L. 111–240, 124 Stat.
2545). Specifically, the Jobs Act requires
SBA to conduct a detailed review of at
least one-third of all size standards
during every 18-month period from the
date of its enactment . In addition, the
Jobs Act requires that SBA conduct a
review of all size standards not less
frequently than once every five years
thereafter. Reviewing existing small
business size standards and making
appropriate adjustments based on
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current data are also consistent with
Executive Order 13563 on improving
regulation and regulatory review.
Rather than review all size standards
at one time, SBA is reviewing size
standards on a Sector by Sector basis. A
NAICS Sector generally consists of 25 to
75 industries, except for NAICS Sector
31–33, Manufacturing, which has
considerably more industries. Once SBA
completes its review of size standards
for industries in a NAICS Sector, it
issues a proposed rule to revise size
standards for those industries for which
it believes currently available data and
other relevant factors support doing so.
Below is a discussion of the size
standards methodology for establishing
receipts based size standards that SBA
applied to this proposed rule, including
analyses of industry structure, Federal
procurement trends and other factors for
industries reviewed in this proposed
rule, the impact of the proposed
revisions to size standards on Federal
small business assistance, and the
evaluation of whether a revised size
standard would exclude dominant firms
from being considered small.
Size Standards Methodology
As stated above, SBA has developed
a ‘‘Size Standards Methodology’’ for
developing, reviewing, and modifying
size standards when necessary. SBA has
published the document on its Web site
at www.sba.gov/size for public review
and comments and included it as a
supporting document in the electronic
docket of this proposed rule at
www.regulations.gov. SBA does not
apply all features of its ‘‘Size Standards
Methodology’’ to all industries because
not all features are appropriate. For
example, since all industries in NAICS
Sector 62 have receipts based size
standards, the methodology described in
this proposed rule applies to
establishing receipts based size
standards. However, the methodology is
made available in its entirety for parties
who have an interest in SBA’s overall
approach to establishing, evaluating,
and modifying small business size
standards. SBA always explains its
analysis in individual proposed and
final rules relating to size standards for
specific industries.
SBA welcomes comments from the
public on a number of issues concerning
its ‘‘Size Standards Methodology,’’ such
as whether there are other approaches to
establishing and modifying size
standards; whether there are alternative
or additional factors that SBA should
consider; whether SBA’s approach to
small business size standards makes
sense in the current economic
environment; whether SBA’s use of
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anchor size standards is appropriate;
whether there are gaps in SBA’s
methodology because the data it uses
are not current or sufficiently
comprehensive; and whether there are
other data, facts, and/or issues that SBA
should consider. Comments on SBA’s
methodology should be submitted via
(1) the Federal eRulemaking Portal:
www.regulations.gov, using docket
number SBA–2009–0008 and following
the instructions for submitting
comments; or (2) Mail/Hand Delivery/
Courier: Khem R. Sharma, Ph.D., Chief,
Size Standards Division, 409 Third
Street SW., Mail Code 6530,
Washington, DC 20416. As with
comments received to this and other
proposed rules, SBA will post all
comments on its methodology on
www.regulations.gov. As of December 9,
2011, SBA has received 13 comments to
its ‘‘Size Standards Methodology.’’ The
comments are available to the public at
www.regulations.gov. SBA continues to
welcome comments on its methodology
from interested parties. SBA will not
accept comments to its ‘‘Size Standards
Methodology’’ submitted by email.
Congress granted SBA’s Administrator
discretion to establish detailed small
business size standards. 15 U.S.C.
632(a)(2). Specifically, Section 3(a)(3) of
the Small Business Act requires that
‘‘* * * the [SBA] Administrator shall
ensure that the size standard varies from
industry to industry to the extent
necessary to reflect the differing
characteristics of the various industries
and consider other factors deemed to be
relevant by the Administrator.’’ 15
U.S.C. 632(a)(3). Accordingly, the
economic structure of an industry is the
basis for developing and modifying
small business size standards. SBA
identifies the small business segment of
an industry by examining data on the
economic characteristics defining the
industry structure (as described below).
In addition, SBA considers current
economic conditions, its mission and
program objectives, the
Administration’s current policies,
suggestions from industry groups and
Federal agencies, and public comments
on the proposed rule. SBA also
examines whether a size standard based
on industry and other relevant data
successfully excludes businesses that
are dominant in the industry.
This proposed rule includes
information regarding the factors SBA
evaluated and the criteria it used to
propose adjustments to certain size
standards in NAICS Sector 62. The rule
also explains why SBA has proposed to
adjust some size standards in NAICS
Sector 62 but not others. This proposed
rule affords the public an opportunity to
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review and to comment on SBA’s
proposals to revise size standards in
NAICS Sector 62, as well as on the data
and methodology it uses to evaluate and
revise a size standard. The public can
also comment on those industries for
which SBA did not propose changes to
their size standards.
Industry Analysis
For the current comprehensive size
standards review, SBA has established
three ‘‘base’’ or ‘‘anchor’’ size standards:
$7 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 manufacturing
industries at its inception in 1953.
Shortly thereafter SBA established $1
million in average annual receipts as the
anchor size standard for
nonmanufacturing industries. SBA has
periodically increased the receipts
based anchor size standard for inflation,
and today it is $7 million. Since 1986,
the size standard for all industries in the
Wholesale Trade Sector for SBA
financial assistance and for most
Federal programs has been 100
employees. However, the 100 employee
size standards do not apply to Federal
procurement programs. Rather, for
Federal procurement the size standard
for all industries in Wholesale Trade
and for all industries in Retail Trade
(NAICS Sector 44–45) is 500 employees
under SBA’s nonmanufacturer rule. See
13 CFR 121.406(b).
These long-standing anchor size
standards have stood the test of time
and gained legitimacy through practice
and general public acceptance. An
anchor 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,
the number of size standards might be
as high as the number of industries for
which SBA establishes size standards
(1,141). Furthermore, the data SBA
analyzes are static, while the U.S.
economy is not. Hence, absolute
precision is impossible. Therefore, SBA
presumes an anchor size standard is
appropriate for a particular industry
unless that industry displays economic
characteristics that are considerably
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different from others with the same
anchor size standard.
When evaluating a size standard, SBA
compares the economic characteristics
of the industry under review to the
average characteristics of industries
with one of the three anchor size
standards (referred to as the ‘‘anchor
comparison group’’). This allows SBA to
assess the industry structure and to
determine whether the industry is
appreciably different from the other
industries in the anchor comparison
group. If the characteristics of a specific
industry under review are similar to the
average characteristics of the anchor
comparison group, the anchor size
standard is generally appropriate for
that industry. SBA may consider
adopting a size standard below the
anchor 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, then a size standard higher than
the anchor size standard may be
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
a size standard above the anchor size
standard, SBA analyzes the
characteristics of a second comparison
group. For industries with receipts
based size standards, including those in
NAICS Sector 62 that are the subject of
this proposed rule, SBA developed a
second comparison group consisting of
industries that have the highest levels of
receipts based size standards. To
determine a size standard above the
anchor size standard, SBA analyzes the
characteristics of this second
comparison group. The size standards
for this group of industries range from
$23 million to $35.5 million in average
annual receipts; the weighted average
size standard for the group is $29
million. SBA refers to this comparison
group as the ‘‘higher level receipts based
size standard group.’’
The primary industry factors that SBA
evaluates include average firm size,
startup costs and entry barriers, industry
competition, and distribution of firms
by size. SBA evaluates, as an additional
primary factor, the impact that revising
size standards might have on Federal
contracting assistance to small
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businesses. These are, generally, the five
most important factors SBA examines
when establishing or revising a size
standard for an industry. However, SBA
will also consider and evaluate other
information that it believes is relevant to
a particular industry (such as
technological changes, growth trends,
SBA financial assistance, other program
factors, etc.). SBA also considers the
possible impacts of size standard
revisions on eligibility for Federal small
business assistance, current economic
conditions, the Administration’s
policies, and suggestions from industry
groups and Federal agencies. Public
comments on a proposed rule also
provide important additional
information. SBA thoroughly reviews all
public comments before making a final
decision on its proposed size standards.
Below are brief descriptions of each of
the five primary factors that SBA has
evaluated for each industry in NAICS
Sector 62 being reviewed in this
proposed rule. A more detailed
description of this analysis is provided
in SBA’s ‘‘Size Standards
Methodology,’’ available at https://
www.sba.gov/size.
1. Average firm size. SBA computes
two measures of average firm size:
simple average and weighted average.
For industries with receipts based size
standards, the simple average is the total
receipts of the industry divided by the
total number of firms in the industry.
The weighted average firm size is the
sum of weighted simple averages in
different receipts size classes, where
weights are the shares of total industry
receipts for respective size classes. The
simple average weighs all firms within
an industry equally regardless of their
size. The weighted average overcomes
that limitation by giving more weight to
larger firms.
If the average firm size of an industry
is significantly higher than the average
firm size of industries in the anchor
comparison industry group, this will
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 will be a
basis to adopt the anchor size standard,
or in rare cases, a standard lower than
the anchor.
2. Startup costs and entry barriers.
Startup costs reflect a firm’s initial size
in an industry. New entrants to an
industry must have sufficient capital
and other assets to start and maintain a
viable business. If new firms entering a
particular industry have greater capital
requirements than firms in industries in
the anchor comparison group, this can
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be a basis for establishing a size
standard higher than the anchor size
standard. In lieu of actual startup costs
data, SBA uses average assets as a proxy
to measure the capital requirements for
new entrants to an industry.
To calculate average assets, SBA
begins with the sales to total assets ratio
for an industry from the Risk
Management Association’s Annual
eStatement Studies. SBA then applies
these ratios to the average receipts of
firms in that industry. An industry with
average assets that are significantly
higher than those of the anchor
comparison group is likely to have
higher startup costs; this in turn will
support a size standard higher than the
anchor. Conversely, an industry with
average assets that are similar to or
lower than those of the anchor
comparison group is likely to have
lower startup costs; this will support the
anchor standard or one lower than the
anchor.
3. Industry competition. Industry
competition is generally measured by
the share of total industry receipts
generated by the largest firms in an
industry. SBA generally evaluates the
share of industry receipts generated by
the four largest firms in each industry.
This is referred to as the ‘‘four-firm
concentration ratio,’’ a commonly used
economic measure of market
competition. SBA compares the fourfirm concentration ratio for an industry
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, all else being equal,
SBA will establish a size standard
higher than the anchor size standard.
SBA does 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-firm concentration ratio
is 40 percent or more, 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 most of an industry’s
economic activity is attributable to
smaller firms, this generally indicates
that small businesses are competitive in
that industry. This can support adopting
the anchor size standard. If most of an
industry’s economic activity is
attributable to larger firms, this
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indicates that small businesses are not
competitive in that industry. This can
support adopting a size standard above
the anchor.
Concentration is a measure of
inequality of distribution. To determine
the degree of inequality of distribution
in an industry, SBA computes the Gini
coefficient by constructing the Lorenz
curve. The Lorenz curve presents the
cumulative percentages of units (firms)
along the horizontal axis and the
cumulative percentages of receipts (or
other measures of size) along the
vertical axis. (For further detail, please
refer to SBA’s ‘‘Size Standards
Methodology’’ on its Web site at
www.sba.gov/size.) Gini coefficient
values vary from zero to one. If receipts
are distributed equally among all the
firms in an industry, the value of the
Gini coefficient will equal zero. If an
industry’s total receipts are attributed to
a single firm, the Gini coefficient will
equal one.
SBA compares the Gini coefficient
value for an industry with that for
industries in the anchor comparison
group. If the Gini coefficient value for
an industry is higher than it is for
industries in the anchor comparison
industry group, all else being equal, this
may warrant a higher size standard than
the anchor. Conversely, if an industry’s
Gini coefficient is similar to or lower
than that for the anchor group, the
anchor standard, or in some cases a
standard lower than the anchor, may be
adopted.
5. Impact on Federal contracting and
SBA loan programs. SBA examines the
possible impact a size standard change
may have on Federal small business
assistance. This most often focuses on
the share of Federal contracting dollars
awarded to small businesses in the
industry in question. In general, if the
small business share of Federal
contracting in an industry with
significant Federal contracting is
appreciably less than the small business
share of the industry’s total receipts,
there is justification for considering a
size standard higher than the existing
size standard. The disparity between the
small business Federal market share and
industry-wide small business share may
be due to various factors, such as
extensive administrative and
compliance requirements associated
with Federal contracts, the different
skill set required by Federal contracts as
compared to typical commercial
contracting work, and the size of
Federal contracts. These, as well as
other factors, are likely to influence the
type of firms within an industry that
compete for Federal contracts. By
comparing the small business Federal
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contracting share with the industrywide small business share, SBA
includes in its size standards analysis
the latest Federal contracting trends.
This analysis may support a size
standard larger than the current size
standard.
SBA considers Federal contracting
trends in the size standards analysis
only if (1) the small business share of
Federal contracting dollars is at least 10
percent lower than the small business
share of total industry receipts, and (2)
the amount of total Federal contracting
averages $100 million or more during
the latest three fiscal years. These
thresholds reflect significant levels of
contracting where a revision to a size
standard may have an impact on
contracting opportunities to small
businesses.
Besides the impact on small business
Federal contracting, SBA also evaluates
the impact of a proposed size standard
revision on SBA’s loan programs. For
this, SBA examines the volume and
number of SBA’s guaranteed loans
within an industry and the size of firms
obtaining those loans. This allows SBA
to assess whether the existing or the
proposed size standard for a particular
industry may restrict the level of
financial assistance to small firms. If the
analysis shows that the current size
standards have impeded financial
assistance to small businesses, higher
size standards may be supportable.
However, if small businesses under
current size standards have 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 than the existing
size standards, this factor is not
considered for determining the size
standard.
Sources of Industry and Program Data
SBA’s primary source of industry data
used in this proposed rule is a special
tabulation of the 2007 Economic Census
(see www.census.gov/econ/census07/)
prepared by the U.S. Bureau of the
Census (Census Bureau) for SBA. The
2007 Economic Census data are the
latest available. The special tabulation
provides SBA with data on the number
of firms, number of establishments,
number of employees, annual payroll,
and annual receipts of companies by
NAICS Sector (2-digit level), Subsector
(3-digit level), Industry Group (4-digit
level), Industry (6-digit level). These
data are arrayed by various classes of
firms’ size based on the overall number
of employees and receipts of the entire
enterprise (all establishments and
affiliated firms) from all industries. The
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special tabulation enables SBA to
evaluate average firm size, the four-firm
concentration ratio, and distribution of
firms by various receipts and
employment size classes.
In some cases, where data were not
available due to disclosure prohibitions
in the Census Bureau’s tabulation, SBA
either estimated missing values using
available relevant data or examined data
at a higher level of industry aggregation,
such as at the NAICS 2-digit (Sector), 3digit (Subsector), or 4-digit (Industry
Group) level. In some instances, SBA’s
analysis was based only on those factors
for which data were available or
estimates of missing values were
possible.
To calculate average assets, SBA used
sales to total assets ratios from the Risk
Management Association’s Annual
eStatement Studies (see https://
www.statementstudies.org/) from 2008
to 2010.
To evaluate Federal contracting
trends, SBA examined data on Federal
contract awards for fiscal years 2008 to
2010. The data are available from the
U.S. General Service Administration’s
Federal Procurement Data System—
Next Generation (FPDS–NG).
To assess the impact on financial
assistance to small businesses, SBA
examined data on its own guaranteed
loan programs for fiscal years 2008 to
2010.
Data sources and estimation
procedures SBA uses in its size
standards analysis are documented in
detail in SBA’s ‘‘Size Standards
Methodology’’ White Paper, which is
available at www.sba.gov/size.
Dominance in Field of Operation
Section 3(a) of the Small Business Act
(15 U.S.C. 632(a)) defines a small
business concern as one that is (1)
Independently owned and operated, (2)
not dominant in its field of operation,
and (3) within a specific small business
definition or size standard established
by the SBA Administrator. SBA
considers as part of its evaluation
whether a business concern at a
proposed size standard would be
dominant in its field of operation. For
this, SBA generally examines the
industry’s market share of firms at the
proposed standard. Market share and
other factors may indicate whether a
firm can exercise a major controlling
influence on a national basis in an
industry where a significant number of
business concerns are engaged. If a
contemplated size standard includes a
dominant firm, SBA will consider a
lower size standard to exclude the
dominant firm from being defined as
small.
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Selection of Size Standards
To simplify size standards, for the
ongoing comprehensive review of
receipts based size standards, SBA has
proposed to select size standards from a
limited number of 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)). At the beginning of the current
comprehensive size standards review,
there were 31 different levels of receipts
based size standards. They ranged from
$0.75 million to $35.5 million, and
many of them applied to one or only a
few industries. SBA believes that size
standards with such a large number of
small variations among them are both
unnecessary and difficult to justify
analytically. To simplify managing and
using size standards, SBA proposes that
there be fewer size standard levels. This
will produce more common size
standards for businesses operating in
related industries. This will also result
in greater consistency among the size
standards for industries that have
similar economic characteristics.
SBA proposes, therefore, to apply one
of eight ‘‘fixed’’ receipts based size
standards to each industry in NAICS
Sector 62. All size standards in NAICS
Sector 62 are based on average annual
receipts. The eight ‘‘fixed’’ receipts
based size standard levels are $5
million, $7 million, $10 million, $14
million, $19 million, $25.5 million, $30
million, and $35.5 million. SBA
established these eight receipts based
size standard based on the current
minimum, the current maximum, and
the most commonly used current
receipts based size standards. At the
start of the current comprehensive
review, the most commonly used
receipts based size standards clustered
around the following: $2.5 million to
$4.5 million, $7 million, $9 million to
$10 million, $12.5 million to $14
million, $25 million to $25.5 million,
and $33.5 million to $35.5 million. SBA
selected $7 million as one of eight fixed
levels of receipts based size standards
because it is an anchor standard for
receipts based standards. The lowest or
minimum receipts based size level will
be $5 million. Other than the size
standards for agriculture and industries
with receipts based on commissions
(such as real estate brokers and travel
agents), the $5 million size standard
includes those industries with the
lowest receipts based standards, which
ranged from $2 million to $4.5 million
at the start of comprehensive size
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11005
standards review. Among the higher
level size clusters, SBA has set four
fixed levels: $10 million, $14 million,
$25.5 million, and $35.5 million.
Because of large intervals between some
of the fixed levels, SBA established two
intermediate levels, namely $19 million
between $14 million and $25.5 million,
and $30 million between $25.5 million
and $35.5 million. These two
intermediate levels reflect roughly the
same proportional differences as
between the other two successive levels.
To simplify size standards further,
SBA may propose a common size
standard for closely related industries.
Although the size standard analysis may
support a separate size standard for each
industry, SBA believes that establishing
different size standards for closely
related industries may not always be
appropriate. For example, in cases
where many of the same businesses
operate in the same multiple industries,
a common size standard for those
industries might better reflect the
Federal marketplace. This might also
make size standards among related
industries more consistent than separate
size standards for each of those
industries. This led SBA to establish a
common size standard for the
information technology (IT) services
(NAICS 541511, NAICS 541112, NAICS
541513, NAICS 541519, and NAICS
811212), even though the industry data
might support a distinct size standard
for each industry (see 57 FR 27906 (June
23, 1992)). In NAICS Sector 62,
currently all industries in NAICS
Industry Group 6211 (Offices of
Physicians), all industries in NAICS
Industry Group 6213 (Offices of Other
Health Practitioners), and all industries
in NAICS Industry Group 6215 (Medical
and Diagnostic Laboratories) have
common size standards. Similarly, all
industries in NAICS Subsector 622
(Hospitals) and all industries in NAICS
Subsector 624 (Social Assistance) have
common size standards. In this
proposed rule, SBA proposes to retain
common size standards for NAICS
Industry Group 6211, NAICS Industry
Group 6213, NAICS Subsector 622, and
NAICS Industry Group 6241 (Individual
and Family Services) and proposes a
new common size standard for NAICS
Industry Group 6232 (Residential
Mental Retardation, Mental Health and
Substance Abuse Facilities). Whenever
SBA proposes a common size standard
for closely related industries, it will
provide its justification.
Evaluation of Industry Structure
SBA evaluated the structure of the 39
industries in NAICS Sector 62, Health
Care and Social Assistance, to assess the
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Federal Register / Vol. 77, No. 37 / Friday, February 24, 2012 / Proposed Rules
appropriateness of the current size
standards. As described above, SBA
compared data on the economic
characteristics of each industry to the
average characteristics of industries in
two comparison groups. The first
comparison group consists of all
industries with a size standard of $7
million size and is referred to as the
‘‘receipts based anchor comparison
group.’’ Because the goal of SBA’s size
standards review is to assess whether a
specific industry’s size standard should
be the same as or different from the
anchor size standard, this is the most
logical group of industries to analyze. 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 are
similar to the average characteristics of
industries in the anchor comparison
group, the anchor size standard is
generally considered appropriate for
that industry. If an industry’s structure
is significantly different from industries
in the anchor group, a size standard
lower or higher than the anchor size
standard might be appropriate. The
level of the new size standard is 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. The average
size standard for this group is $29
million. SBA refers to this group of
industries as the ‘‘higher level receipts
based size standard comparison group.’’
SBA determines differences in industry
structure between an industry under
review and the industries in the two
comparison groups by comparing data
on each of the industry factors,
including average firm size, average
assets size, the four-firm concentration
ratio, and the Gini coefficient of
distribution of firms by size. Table 1,
Average Characteristics of Receipts
Based Comparison Groups, (below)
shows the average firm size (both simple
and weighted), average assets size, fourfirm concentration ratio, average
receipts of the four largest firms, and the
Gini coefficient for both anchor level
and higher level comparison groups for
receipts based size standards.
TABLE 1—AVERAGE CHARACTERISTICS OF RECEIPTS BASED COMPARISON GROUPS
Average firm size
($ million)
Receipts based
comparison group
Weighted
average
Simple average
Anchor Level ....................
Higher Level .....................
Average assets
size
($ million)
1.32
5.07
19.63
116.84
Average receipts
of four largest
firms
($ million) *
Four-firm
concentration
ratio (%)
0.84
3.20
16.6
32.1
196.4
1,376.0
Gini coefficient
0.693
0.830
* To be used for industries with a four-firm concentration ratio of 40% or greater.
Derivation of Size Standards Based on
Industry Factors
For each industry factor in Table 1,
SBA derives a separate size standard
based on the differences between the
values for an industry under review and
the values for the two comparison
groups. If the industry value for a
particular factor is near the
corresponding factor for the anchor
comparison group, SBA will consider
the $7 million anchor size standard
appropriate for that factor.
An industry factor significantly above
or below the anchor comparison group
will generally imply a size standard for
that industry above or below the $7
million anchor. The new size standard
in these cases is 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 are $3.3 million, that
can support a $19 million size standard.
The $3.3 million level is 52.8 percent
between $1.32 million for the anchor
comparison group and $5.07 million for
the higher level comparison group
(($3.30 million ¥ $1.32 million) ÷
($5.07 million ¥ $1.32 million) = 0.528
or 52.8%). This proportional difference
is applied to the difference between the
$7 million anchor size standard and
average size standard of $29 million for
the higher level size standard group and
then added to $7 million to estimate a
size standard of $18.61 million ([{$29.0
million ¥ $7.0 million} * 0.528] + $7.0
million = $18.61 million). The final step
is to round the estimated $18.61 million
size standard to the nearest fixed size
standard, which in this example is
$19 million.
SBA applies the above calculation to
derive a size standard for each industry
factor. Detailed formulas involved in
these calculations are presented in
SBA’s ‘‘Size Standards Methodology,’’
which is available on its Web site at
www.sba.gov/size. (However, it should
be noted that figures in the ‘‘Size
Standards Methodology’’ White Paper
are based on 2002 Economic Census
data and are different from those
presented in this proposed rule. That is
because when SBA prepared its ‘‘Size
Standards Methodology,’’ the 2007
Economic Census data were not yet
available). Table 2, Values of Industry
Factors Supported Size Standards,
(below) shows ranges of values for each
industry factor and the levels of size
standards supported by those values.
mstockstill on DSK4VPTVN1PROD with PROPOSALS
TABLE 2—VALUES OF INDUSTRY FACTORS AND SUPPORTED SIZE STANDARDS
If simple average
receipts size
($ million)
Or if weighted average
receipts size
($ million)
Or if average assets
size
($ million)
Or if average receipts
of largest four firms
($ million)
Or if
Gini coefficient
<1.15 .............................
1.15 to 1.57 ...................
1.58 to 2.17 ...................
2.18 to 2.94 ...................
2.95 to 3.92 ...................
3.93 to 4.86 ...................
<15.22 .........................
15.22 to 26.26 .............
26.27 to 41.73 .............
41.74 to 61.61 .............
61.62 to 87.02 .............
87.03 to 111.32 ...........
<0.73 ...........................
0.73 to 1.00 .................
1.01 to 1.37 .................
1.38 to 1.86 .................
1.87 to 2.48 .................
2.49 to 3.07 .................
<142.8 .........................
142.8 to 276.9 .............
277.0 to 464.5 .............
464.6 to 705.8 .............
705.9 to 1,014.1 ..........
1,014.2 to 1,309.0 .......
<0.686 .........................
0.686 to 0.702 .............
0.703 to 0.724 .............
0.725 to 0.752 .............
0.753 to 0.788 .............
0.789 to 0.822 .............
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Then implied
size standard
is
($ million)
5.0
7.0
10.0
14.0
19.0
25.5
Federal Register / Vol. 77, No. 37 / Friday, February 24, 2012 / Proposed Rules
11007
TABLE 2—VALUES OF INDUSTRY FACTORS AND SUPPORTED SIZE STANDARDS—Continued
If simple average
receipts size
($ million)
Or if weighted average
receipts size
($ million)
Or if average assets
size
($ million)
Or if average receipts
of largest four firms
($ million)
Or if
Gini coefficient
4.87 to 5.71 ...................
>5.71 .............................
111.33 to 133.41 .........
>133.41 .......................
3.08 to 3.61 .................
>3.61 ...........................
1,309.1 to 1,577.1 .......
>1,577.1 ......................
0.823 to 0.853 .............
>0.853 .........................
mstockstill on DSK4VPTVN1PROD with PROPOSALS
Derivation of Size Standard Based on
Federal Contracting Factor
Besides industry structure, SBA also
evaluates Federal contracting data to
assess how successful small businesses
are in getting Federal contracts under
the existing size standards. For
industries where the small business
share of total Federal contracting dollars
is 10 to 30 percent lower than the small
business share of total industry receipts,
SBA has designated a size standard one
level higher than their current size
standard. For industries where the small
business share of total Federal
contracting dollars is more than 30
percent lower than the small business
share of total industry receipts, SBA has
designated a size standard two levels
higher than the current size standard.
Because of the complex relationships
among several variables affecting small
business participation in the Federal
marketplace, SBA has chosen not to
designate a size standard for the Federal
contracting factor alone that is more
than two levels above the current size
standard. 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
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a more extensive examination of Federal
contracting experience. This may
support a different size standard than
indicated by this general rule and take
into consideration significant and
unique aspects of small business
competitiveness in the Federal contract
market. SBA welcomes comments on its
methodology for 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.
Of the 39 industries in NAICS Sector
62 reviewed in this proposed rule, 13
industries averaged $100 million or
more annually in Federal contracting
during fiscal years 2008 to 2010. In five
of those 13 industries, the Federal
contracting factor was significant (i.e.,
the difference between the small
business share of total industry receipts
and small business share of Federal
contracting dollars was 10 percentage
points or more), and a separate size
standard was derived for that factor for
each of them.
New Size Standards Based on Industry
and Federal Contracting Factors
Table 3, Size Standards Supported by
Each Factor for Each Industry (millions
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Then implied
size standard
is
($ million)
30.0
35.5
of dollars), shows the results of analyses
of industry and Federal contracting
factors for each industry covered by this
proposed rule. Many of the NAICS
industries in columns 2, 3, 4, 6, 7, and
8 show two numbers. The upper
number is the value for the industry or
Federal contracting factor shown on the
top of the column, and the lower
number is the size standard supported
by that factor. For the four-firm
concentration ratio, SBA estimates a
size standard 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. If the four-firm
concentration ratio is more than 40
percent, SBA indicates in column 6 the
average size of the industry’s top four
firms together with a size standard
based on that average. Column 9 shows
a calculated new size standard for each
industry. This is the average of the size
standards supported by each factor,
rounded to the nearest fixed size level.
Analytical details involved in the
averaging procedure are described in
SBA’s ‘‘Size Standard Methodology.’’
For comparison with the new standards,
the current size standards are in column
10 of Table 3.
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622310—Specialty (except Psychiatric and Substance
Abuse) Hospitals .................................................................
622210—Psychiatric and Substance Abuse Hospitals ..........
622110—General Medical and Surgical Hospitals .................
621999—All Other Miscellaneous Ambulatory Health Care
Services ...............................................................................
621991—Blood and Organ Banks ..........................................
621910—Ambulance Services ...............................................
621610—Home Health Care Services ...................................
621512—Diagnostic Imaging Centers ....................................
621511—Medical Laboratories ...............................................
621498—All Other Outpatient Care Centers ..........................
621493—Freestanding Ambulatory Surgical and Emergency
Centers ................................................................................
621492—Kidney Dialysis Centers ..........................................
621491—HMO Medical Centers .............................................
621420—Outpatient Mental Health and Substance Abuse
Centers ................................................................................
621410—Family Planning Centers .........................................
621399—Offices of All Other Miscellaneous Health Practitioners ..................................................................................
621391—Offices of Podiatrists ...............................................
621340—Offices of Physical, Occupational and Speech
Therapists and Audiologists ................................................
621330—Offices of Mental Health Practitioners (except Physicians) ................................................................................
621320—Offices of Optometrists ...........................................
621310—Offices of Chiropractors ..........................................
621210—Offices of Dentists ...................................................
621112—Offices of Physicians, Mental Health Specialists ....
$75.9
$35.5
$2.8
$14.0
$213.7
$35.5
$40.1
$35.5
$4.4
$25.5
$5.4
$30.0
$8.2
$35.5
$3.4
$19.0
$2.9
$14.0
$3.2
$19.0
$24.4
$35.5
$2.6
$14.0
$153.2
$35.5
$25.3
$35.5
$0.3
$5.0
$1.3
$7.0
$0.8
$5.0
$0.5
$5.0
$0.3
$5.0
$1.8
$10.0
$0.4
$5.0
$0.8
$5.0
$0.3
$5.0
$0.6
$5.0
(2)
(1)
621111—Offices of Physicians (except Mental Health Specialists) ................................................................................
Simple
average
firm size
($ million)
$1.2
$5.0
$7.2
$5.0
$7.8
$5.0
$1.0
$5.0
$1.8
$5.0
$31.1
$10.0
$1.4
$5.0
$3.9
$5.0
$0.5
$5.0
$1.4
$5.0
$123.8
$30.0
$24.0
$7.0
$472.3
$35.5
$58.3
$14.0
$14.1
$5.0
$28.0
$10.0
$67.5
$19.0
$14.8
$5.0
$23.1
$7.0
$25.5
$7.0
$147.2
$35.5
$7.8
$5.0
$370.2
$35.5
$244.4
$35.5
(3)
Weighted
average
firm size
($ million)
$2.0
$19.0
$2.8
$25.5
$3.9
$35.5
$1.7
$14.0
$0.9
$7.0
$1.4
$14.0
$17.4
$35.5
$1.5
$14.0
$58.9
$35.5
$13.1
$35.5
$0.1
$5.0
$0.9
$7.0
$0.2
$5.0
$0.1
$5.0
$0.1
$5.0
$0.3
$5.0
$0.1
$5.0
$0.2
$5.0
$0.1
$5.0
$0.1
$5.0
$49.5
$35.5
$1.3
$10.0
$183.2
$35.5
$25.0
$35.5
(4)
Average
assets size
($ million)
24.0
15.2
20.4
........................
7.8
13.7
........................
9.4
........................
45.3
........................
7.4
........................
7.4
........................
23.6
........................
34.6
........................
3.7
........................
88.3
........................
76.5
........................
2.1
........................
17.4
........................
12.3
........................
0.9
........................
3.3
........................
4.4
........................
2.5
........................
1.4
........................
0.6
........................
1.7
........................
(5)
Four-firm ratio
(%)
[Millions of dollars]
$1,708.4
$653.2
$370.6
........................
$12,744.3
$526.8
........................
$637.7
........................
$2,587.9
$35.5
$316.7
........................
$884.8
........................
$586.4
........................
$770.3
........................
$111.1
........................
$1,184.0
$25.5
$2,365.3
$35.5
$17.6
........................
$78.3
........................
$546.0
........................
$8.5
........................
$43.0
........................
$3,660.3
........................
$27.0
........................
$330.4
........................
$14.1
........................
$42.9
........................
(6)
Four-firm
average size
($ million)
0.352
$5.0
0.722
$10.0
0.617
$5.0
0.261
$5.0
0.468
$5.0
0.697
$7.0
0.362
$5.0
0.343
$5.0
0.112
$5.0
0.317
$5.0
........................
........................
0.805
$25.5
........................
0.648
$5.0
0.763
$19.0
0.830
$30.0
0.725
$14.0
0.786
$19.0
0.764
$19.0
0.795
$25.5
0.860
$35.5
0.651
$5.0
........................
(7)
Gini coefficient
TABLE 3—SIZE STANDARDS SUPPORTED BY EACH FACTOR FOR EACH INDUSTRY
NAICS code/
NAICS industry title
mstockstill on DSK4VPTVN1PROD with PROPOSALS
........................
........................
51.8
42.1
........................
........................
........................
........................
$35.5
$30.0
$35.5
$14.0
$30.0
$14.0
$14.0
$14.0
$30.0
¥6.9
$14.0
$35.5
$30.0
$14.0
$7.0
$7.0
$5.0
$5.0
$5.0
$5.0
$5.0
$7.0
$5.0
$10.0
$19.0
(9)
Calculated
size standard
($ million)
........................
........................
........................
¥35.5
$19.0
0.1
¥23.3
$10.0
........................
........................
........................
........................
........................
¥14.5
$10.0
........................
¥14.6
$14.0
¥8.0
(8)
Federal
contract
factor
(%)
$34.5
$34.5
$34.5
$10.0
$10.0
$7.0
$13.5
$13.5
$13.5
$10.0
$10.0
$34.5
$10.0
$10.0
$10.0
$7.0
$7.0
$7.0
$7.0
$7.0
$7.0
$7.0
$10.0
$10.0
(10)
Current size
standard
($ million)
11008
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624410—Child Day Care Services .........................................
624310—Vocational Rehabilitation Services ..........................
624230—Emergency and Other Relief Services ...................
624229—Other Community Housing Services .......................
624221—Temporary Shelters .................................................
624210—Community Food Services ......................................
624190—Other Individual and Family Services .....................
624120—Services for the Elderly and Persons with Disabilities ......................................................................................
624110—Child and Youth Services .......................................
623990—Other Residential Care Facilities ............................
623312—Homes for the Elderly .............................................
623311—Continuing Care Retirement Communities .............
623220—Residential Mental Health and Substance Abuse
Facilities ..............................................................................
623210—Residential Mental Retardation Facilities ................
623110—Nursing Care Facilities ............................................
mstockstill on DSK4VPTVN1PROD with PROPOSALS
$1.6
$10.0
$1.3
$7.0
$1.8
$10.0
$1.2
$7.0
$1.8
$10.0
$11.3
$35.5
$2.5
$14.0
$0.5
$5.0
$2.5
$14.0
$7.2
$35.5
$1.3
$7.0
$2.3
$14.0
$1.6
$10.0
$10.7
$35.5
$3.1
$19.0
$11.7
$5.0
$9.9
$5.0
$12.3
$5.0
$2.9
$5.0
$14.5
$5.0
$265.3
$35.5
$9.3
$5.0
$9.9
$5.0
$7.9
$5.0
$31.7
$10.0
$18.1
$7.0
$7.9
$5.0
$9.0
$5.0
$56.7
$14.0
$18.7
$7.0
$1.0
$7.0
$0.9
$7.0
0.8
$7.0
1.6
$14.0
$3.6
$30.0
........................
........................
$1.6
$14.0
0.2
$5.0
$1.7
$14.0
$12.7
$35.5
$1.7
$14.0
$1.7
$14.0
$1.2
$10.0
$7.7
$35.5
$1.9
$19.0
3.6
........................
........................
........................
7.2
........................
5.9
........................
21.1
21.1
43.0
........................
5.6
........................
11.4
........................
6.8
........................
10.9
........................
18.6
........................
5.4
........................
........................
........................
10.6
........................
8.9
........................
$230.2
........................
........................
........................
$93.7
........................
$55.4
........................
$321.6
$321.6
$906.6
$19.0
$160.5
........................
$842.7
........................
$147.1
........................
$709.9
........................
$705.3
........................
$113.4
........................
........................
........................
$2,462.0
........................
$407.6
........................
0.719
$10.0
0.727
$14.0
0.753
$19.0
0.487
$5.0
0.651
$5.0
0.925
$35.5
0.644
$5.0
0.538
$5.0
0.610
$5.0
0.720
$10.0
0.729
$14.0
0.663
$5.0
0.702
$7.0
0.691
$7.0
0.717
$10.0
........................
........................
........................
........................
........................
........................
¥9.9
........................
$10.0
¥20.8
$10.0
........................
$5.0
$10.0
$30.0
$14.0
$10.0
$10.0
$10.0
$7.0
$7.0
$10.0
$25.5
$10.0
$14.0
$25.5
........................
........................
........................
........................
14.1
$7.0
$7.0
$7.0
$7.0
$7.0
$7.0
$7.0
$7.0
$7.0
$7.0
$7.0
$13.5
$7.0
$10.0
$13.5
Federal Register / Vol. 77, No. 37 / Friday, February 24, 2012 / Proposed Rules
Sfmt 4702
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11010
Federal Register / Vol. 77, No. 37 / Friday, February 24, 2012 / Proposed Rules
Common Size Standards
When many of the same businesses
operate in multiple industries, SBA
believes that a common size standard
can be appropriate for these industries
even if the industry and relevant
program data suggest different size
standards. For instance, in past rules,
SBA established a common size
standard for Computer Systems Design
and Related Services (NAICS 541511,
NAICS 541112, NAICS 541513, NAICS
541519 (excluding the ‘‘exception’’),
and NAICS 811212). Another example is
the common size standard for certain
Architectural, Engineering (A&E) and
Related Services. These include NAICS
541310, NAICS 541330 (excluding the
‘‘exceptions’’), Map Drafting (an
‘‘exception’’ under NAICS 541340),
NAICS 541360, and NAICS 541370 (see
64 FR 28275 (May 25, 1999)). More
recently, SBA established a common
size standard for some of the industries
in NAICS Sector 44–45, Retail Trade
(see 75 FR 61597 (October 6, 2010)).
Earlier this year, SBA proposed
common size standards for several
industries in NAICS Sector 54,
Professional, Scientific and Technical
Services (see 76 FR 14323 (March 16,
2011)), NAICS Sector 48–49,
Transportation and Warehousing (see 76
FR 27935 (May 13, 2011)), NAICS Sector
56, Administrative and Support, Waste
Management and Remediation Services
(see 76 FR 63510 (October 12, 2011)),
and NAICS Sector 53, Real Estate and
Rental and Leasing (see 76 FR 70680
(November 15, 2011)).
For NAICS Sector 62, SBA derives, as
an alternative to a separate size standard
for each industry, common size
standards for industries in four NAICS
Industry Groups and one NAICS
Subsector, as shown in Table 4 Industry
Groups for Common Size Standards.
The SBA evaluated industry and
Federal contracting factors and derived
a common size standard for each
Industry Group and Subsector using the
same method as described above. The
results are in Table 5, Size Standards
Supported by Each Factor for Each
Industry Group (millions of dollars)
which immediately follows Table 4,
below.
TABLE 4—INDUSTRY GROUPS FOR COMMON SIZE STANDARDS
Industries: 6-digit NAICS
codes
Industry sector/group: NAICS codes
Industry group title
6211 * ................................................
6213 * ................................................
Offices of Physicians ..................................................................................
Offices of Other Health Practitioners .........................................................
622 ....................................................
6232 ..................................................
Hospitals .....................................................................................................
Residential Mental Retardation, Mental Health and Substance Abuse
Facilities.
Individual and Family Services ..................................................................
6241 * ................................................
621111, 621112
621310, 621320, 621330,
621340, 621391, 621399
622110, 622210, 622310
623210, 623220
624110, 624120, 624190
* Industries in these Industry Groups currently have the common size standards. SBA proposes to retain common size standards for those industries and proposes a common size standard for two industries in NAICS Industry Group 6232 that currently have separate size standards.
TABLE 5—SIZE STANDARDS SUPPORTED BY EACH FACTOR FOR EACH INDUSTRY GROUP
[Millions of dollars]
NAICS code/industry title
Simple
average
firm size
($ million)
Weighted
average
firm size
($ million)
Average
assets size
($ million)
Four-firm ratio
(%)
Four-firm
average size
($ million)
Gini coefficient
Federal
contract
factor
(%)
Calculated
size standard
($ million)
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
6211—Offices of physicians ..............................
6213—Offices of other
health practitioners ........
622—Hospitals ..................
$1.7
$10.0
$30.5
$10.0
$0.3
$5.0
4.4
........................
$3,663.3
........................
0.697
$7.0
¥11.9
$14.0
$10.0
$0.4
$5.0
$191.0
$35.5
$3.1
$5.0
$460.6
$35.5
$0.1
$5.0
$160.6
$35.5
4.3
........................
7.4
$546.4
........................
$12,984.0
0.410
$5.0
........................
¥16.3
$10.0
50.2
$7.0
$35.5
$3.0
$19.0
$15.2
$7.0
$1.9
$19.0
6.3
........................
$425.5
........................
0.701
$7.0
........................
$14.0
$1.5
$7.0
$13.4
$5.0
$1.0
$7.0
3.1
........................
$489.7
........................
0.740
$14.0
¥11.9
$10.0
$10.0
6232—Residential mental
retardation, mental
health and substance
abuse facilities ...............
6241—Individual and Family Services ....................
mstockstill on DSK4VPTVN1PROD with PROPOSALS
Evaluation of SBA Loan Data
Before deciding on an industry’s size
standard, SBA also considers the impact
of new or revised size standards on
SBA’s loan programs. Accordingly, SBA
examined its 7(a) and 504 Loan Program
data for fiscal years 2008 to 2010 to
assess whether the proposed size
standards need further adjustments to
ensure credit opportunities for small
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16:54 Feb 23, 2012
Jkt 226001
businesses through those programs. For
the industries reviewed in this rule, the
data show that it is mostly businesses
much smaller than the current size
standards that utilize the SBA’s 7(a) and
504 loans.
Furthermore, the Jobs Act established
an alternative size standard for SBA’s
7(a) and 504 Program applicants.
Specifically, an applicant exceeding an
NAICS industry based size standard
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Fmt 4702
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may still be eligible if its maximum
tangible net worth does not exceed $15
million and its average net income after
Federal income taxes (excluding any
carry-over losses) for the 2 full fiscal
years before the date of the application
is not more than $5 million.
Therefore, no size standard in NAICS
62, Health Care and Social Assistance,
needs an adjustment based on this
factor.
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Federal Register / Vol. 77, No. 37 / Friday, February 24, 2012 / Proposed Rules
Proposed Changes to Size Standards
Table 6, Summary of Size Standards
Analysis, (below) summarizes the
results of SBA analyses of industry
specific size standards from Table 3 and
the results for common size standards
from Table 5. In terms of industry
specific size standards, the results in
Table 3 might support increases in size
standards for 25 industries, decreases
for nine industries and no changes for
five industries. Based on common size
11011
standards for certain NAICS Industry
Groups and Subsectors, the results in
Table 5 appear to support increases in
size standards for 28 industries,
decreases for two industries, and no
changes for nine industries.
TABLE 6—SUMMARY OF SIZE STANDARDS ANALYSIS
NAICS industry title
621111 ................................
Offices of Physicians (except Mental Health Specialists).
Offices of Physicians, Mental Health Specialists ...........
Offices of Dentists ..........................................................
Offices of Chiropractors .................................................
Offices of Optometrists ...................................................
Offices of Mental Health Practitioners (except Physicians).
Offices of Physical, Occupational and Speech Therapists and Audiologists.
Offices of Podiatrists ......................................................
Offices of All Other Miscellaneous Health Practitioners
Family Planning Centers ................................................
Outpatient Mental Health and Substance Abuse Centers.
HMO Medical Centers ....................................................
Kidney Dialysis Centers .................................................
Freestanding Ambulatory Surgical and Emergency
Centers.
All Other Outpatient Care Centers .................................
Medical Laboratories ......................................................
Diagnostic Imaging Centers ...........................................
Home Health Care Services ..........................................
Ambulance Services .......................................................
Blood and Organ Banks .................................................
All Other Miscellaneous Ambulatory Health Care Services.
General Medical and Surgical Hospitals ........................
Psychiatric and Substance Abuse Hospitals .................
Specialty (except Psychiatric and Substance Abuse)
Hospitals.
Nursing Care Facilities ...................................................
Residential Mental Retardation Facilities .......................
Residential Mental Health and Substance Abuse Facilities.
Continuing Care Retirement Communities ....................
Homes for the Elderly ....................................................
Other Residential Care Facilities ...................................
Child and Youth Services ...............................................
Services for the Elderly and Persons with Disabilities ..
Other Individual and Family Services ............................
Community Food Services .............................................
Temporary Shelters ........................................................
Other Community Housing Services ..............................
Emergency and Other Relief Services ...........................
Vocational Rehabilitation Services .................................
Child Day Care Services ................................................
621112
621210
621310
621320
621330
................................
................................
................................
................................
................................
621340 ................................
621391
621399
621410
621420
................................
................................
................................
................................
621491 ................................
621492 ................................
621493 ................................
621498
621511
621512
621610
621910
621991
621999
................................
................................
................................
................................
................................
................................
................................
622110 ................................
622210 ................................
622310 ................................
623110 ................................
623210 ................................
623220 ................................
mstockstill on DSK4VPTVN1PROD with PROPOSALS
623311
623312
623990
624110
624120
624190
624210
624221
624229
624230
624310
624410
................................
................................
................................
................................
................................
................................
................................
................................
................................
................................
................................
................................
Despite the results depicted in Table
6, SBA believes that lowering small
business size standards is not in the best
interest of small businesses in the
current economic environment. The
U.S. economy was in recession from
December 2007 to June 2009, the longest
and deepest of any recessions since
World War II. The economy lost more
than eight million non-farm jobs during
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16:54 Feb 23, 2012
Jkt 226001
2008 to 2009. In response, Congress
passed and the President signed into
law the American Recovery and
Reinvestment Act of 2009 (Recovery
Act) to promote economic recovery and
to preserve and create jobs. Although
the recession officially ended in June
2009, the unemployment rate was 9.4
percent or higher from May 2009 to
December 2010. It has moderated
PO 00000
Frm 00031
Fmt 4702
Calculated
industry specific
size standard
($ million)
Current size
standard
($ million)
NAICS codes
Sfmt 4702
Calculated
common size
standard
($ million)
$10.0
$10.0
$10.0
10.0
7.0
7.0
7.0
7.0
5.0
7.0
5.0
5.0
5.0
10.0
............................
7.0
7.0
7.0
7.0
5.0
7.0
7.0
7.0
10.0
10.0
5.0
7.0
7.0
14.0
7.0
7.0
............................
............................
10.0
34.5
10.0
30.0
35.5
14.0
............................
............................
............................
10.0
13.5
13.5
13.5
7.0
10.0
10.0
19.0
30.0
14.0
14.0
14.0
30.0
14.0
............................
............................
............................
............................
............................
............................
............................
34.5
34.5
34.5
35.5
30.0
35.5
35.5
35.5
35.5
13.5
10.0
7.0
25.5
14.0
10.0
............................
14.0
14.0
13.5
7.0
7.0
7.0
7.0
7.0
7.0
7.0
7.0
7.0
7.0
7.0
25.5
10.0
10.0
7.0
7.0
10.0
10.0
10.0
14.0
30.0
10.0
5.0
............................
............................
............................
10.0
10.0
10.0
............................
............................
............................
............................
............................
............................
somewhat to 8.6 percent in November
2011, but has been 9.0 percent or higher
for eight of the previous 10 months. The
unemployment rate is forecast to remain
around this elevated level for a while.
More recently, Congress passed and the
President signed the Jobs Act to promote
small business job creation. The Jobs
Act puts more capital into the hands of
entrepreneurs and small business
E:\FR\FM\24FEP1.SGM
24FEP1
11012
Federal Register / Vol. 77, No. 37 / Friday, February 24, 2012 / Proposed Rules
owners; strengthens small businesses’
ability to compete for contracts;
includes recommendations from the
President’s Task Force on Federal
Contracting Opportunities for Small
Business; creates a more even playing
field for small businesses; promotes
small business exporting, building on
the President’s National Export
Initiative; expands training and
counseling; and provides $12 billion in
tax relief to help small businesses invest
in their firms and create jobs.
Lowering size standards can decrease
the number of firms that participate in
Federal financial and procurement
assistance programs for small
businesses. It can also affect small
businesses that are now exempt from or
that receive some form of relief from the
myriad other Federal regulations that
use SBA’s size standards. That impact
could take the form of increased fees,
paperwork, or other compliance
requirements for small businesses.
Furthermore, size standards based
solely on analytical results without any
other considerations can cut off
currently eligible small firms from those
programs and benefits. In NAICS Sector
62, more than 500 businesses would
lose their small business eligibility if
size standards were lowered based
solely on results from industry specific
analysis, and more than 240 small firms
would lose their eligibility if the size
standards were lowered based solely on
common size standards analysis. That
would run counter to what SBA and the
Federal Government are doing to help
small businesses. Reducing size
eligibility for Federal procurement
opportunities, especially under current
economic conditions, would not
preserve or create more jobs; rather, it
would have the opposite effect.
Therefore, in this proposed rule, SBA
does not intend to reduce size standards
for any industries. For industries where
analyses might seem to support
lowering size standards, SBA proposes
to retain the current size standards. As
stated previously, the Small Business
Act requires the Administrator to
‘‘* * * consider other factors deemed to
be relevant * * *’’ to establishing small
business size standards. The current
economic conditions and the impact on
job creation are quite relevant to
establishing small business size
standards. SBA nevertheless invites
comments and suggestions on whether
it should lower size standards as
suggested by analyses of industry and
program data or retain the current
standards for those industries in view of
current economic conditions.
Based on comparisons between
industry specific size standards and
common size standards within each
Industry Group or Subsector, SBA finds
that for some industries, common size
standards are more appropriate for
several reasons. First, analyzing
industries at the more aggregated
Industry Group or Subsector level
simplifies size standards analysis and
will produce more consistent results
among related industries. Second, in
most cases, industries within each
Industry Group or Subsector currently
have the same size standards and SBA
believes it is better to keep the revised
size standards also the same unless
industries are significantly different.
Third, within each Industry Group or
Subsector many of the same businesses
tend to operate in the same multiple
industries. SBA believes that common
size standards reflect the Federal
marketplace in those industries better
than do different size standards for each
industry. Fourth, industry specific size
standards and common size standards
are mostly within a reasonably close
range.
For industries where both industry
specific size standards and common size
standards have been calculated, for the
above reasons, SBA proposes to apply
common size standards. For industries
where SBA has not estimated common
size standards, it proposes to apply
industry specific size standards. As
discussed above, SBA has decided that
lowering small business size standards
is inconsistent with what the Federal
Government is doing to stimulate the
economy and encourage job growth
through the Recovery Act and the Jobs
Act. Therefore, for those industries for
which its analyses suggested decreasing
their size standards, SBA proposes to
retain the current size standards. Thus,
of the 39 industries in NAICS Sector 62,
SBA proposes to increase size standards
for 28 industries and retain the current
size standards for 11 industries. The
industries for which SBA has proposed
to increase their size standards and their
proposed size standards appear in Table
7, Summary of Proposed Size Standards
Revisions (below).
SBA’s decision to not lower size
standards in NAICS Sector 62 is
consistent with SBA’s prior actions for
NAICS Sector 44–45 (Retail Trade),
NAICS Sector 72 (Accommodation and
Food Services), and NAICS Sector 81
(Other Services), which the Agency
proposed (74 FR 53924, 74 FR 53913,
and 74 FR 53941 (October 21, 2009))
and adopted in its final rules (75 FR
61597, 75 FR 61604, and 75 FR 61591
(October 6, 2010)). It is also consistent
with the Agency’s recently proposed
rules for NAICS Sector 54, Professional,
Technical, and Scientific Services (76
FR 14323 (March 16, 2011)), NAICS
Sector 48–49, Transportation and
Warehousing (76 FR 27935 (May 13,
2011)), NAICS Sector 51, Information
(76 FR 63216 (October 12, 2011)), and
NAICS Sector 56, Administrative and
Support, Waste Management and
Remediation Services (76 FR 63510
(October 12, 2011)), NAICS Sector 61,
Educational Services (76 FR 70667
(November 15, 2011)), and NAICS
Sector 53, Real Estate and Rental and
Leasing (76 FR 70680 (November 15,
2011)). In each of those final and
proposed rules, SBA opted not to reduce
small business size standards, for the
same reasons it has provided above in
this proposed rule.
TABLE 7—SUMMARY OF PROPOSED SIZE STANDARDS REVISIONS
mstockstill on DSK4VPTVN1PROD with PROPOSALS
NAICS codes
621420
621491
621492
621493
621498
621511
621512
621610
621910
621991
621999
..........................................
..........................................
..........................................
..........................................
..........................................
..........................................
..........................................
..........................................
..........................................
..........................................
..........................................
VerDate Mar<15>2010
16:54 Feb 23, 2012
Current size
standard
($ million)
NAICS industry title
Outpatient Mental Health and Substance Abuse Centers ..................
HMO Medical Centers .........................................................................
Kidney Dialysis Centers .......................................................................
Freestanding Ambulatory Surgical and Emergency Centers ..............
All Other Outpatient Care Centers ......................................................
Medical Laboratories ............................................................................
Diagnostic Imaging Centers .................................................................
Home Health Care Services ................................................................
Ambulance Services ............................................................................
Blood and Organ Banks ......................................................................
All Other Miscellaneous Ambulatory Health Care Services ................
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E:\FR\FM\24FEP1.SGM
24FEP1
$10.0
10.0
34.5
10.0
10.0
13.5
13.5
13.5
7.0
10.0
10.0
Proposed size
standard
($ million)
$14.0
30.0
35.5
14.0
19.0
30.0
14.0
14.0
14.0
30.0
14.0
Federal Register / Vol. 77, No. 37 / Friday, February 24, 2012 / Proposed Rules
11013
TABLE 7—SUMMARY OF PROPOSED SIZE STANDARDS REVISIONS—Continued
NAICS codes
622110
622210
622310
623110
623210
623220
623311
623312
623990
624110
624120
624190
624210
624221
624229
624230
624310
..........................................
..........................................
..........................................
..........................................
..........................................
..........................................
..........................................
..........................................
..........................................
..........................................
..........................................
..........................................
..........................................
..........................................
..........................................
..........................................
..........................................
General Medical and Surgical Hospitals .............................................
Psychiatric and Substance Abuse Hospitals .......................................
Specialty (except Psychiatric and Substance Abuse) Hospitals .........
Nursing Care Facilities .........................................................................
Residential Mental Retardation Facilities ............................................
Residential Mental Health and Substance Abuse Facilities ................
Continuing Care Retirement Communities ..........................................
Homes for the Elderly ..........................................................................
Other Residential Care Facilities .........................................................
Child and Youth Services ....................................................................
Services for the Elderly and Persons with Disabilities ........................
Other Individual and Family Services ..................................................
Community Food Services ...................................................................
Temporary Shelters .............................................................................
Other Community Housing Services ...................................................
Emergency and Other Relief Services ................................................
Vocational Rehabilitation Services ......................................................
Evaluation of Dominance in Field of
Operation
SBA has determined that for the
industries in NAICS Sector 62 for which
it has proposed to increase size
standards, no individual firm at or
below the proposed size standard will
be large enough to dominate its field of
operation. At the proposed individual
size standards, if adopted, small
business shares of total industry receipts
among those industries vary from less
than 0.01 percent to 0.6 percent, with an
average of 0.1 percent. These levels of
market share effectively preclude a firm
at or below the proposed size standards
from exerting control on any of the
industries.
mstockstill on DSK4VPTVN1PROD with PROPOSALS
Request for Comments
SBA invites public comments on this
proposed rule, especially on the
following issues:
1. To simplify size standards, SBA
proposes eight fixed levels for receipts
based size standards: $5 million, $7
million, $10 million, $14 million, $19
million, $25.5 million, $30 million, and
$35.5 million. SBA invites comments on
whether simplification of size standards
in this way is necessary and if these
proposed fixed size levels are
appropriate. SBA welcomes suggestions
on alternative approaches to simplifying
small business size standards.
2. SBA seeks feedback on whether the
proposed size standards for NAICS
Sector 62 are appropriate given the
economic characteristics of each
industry reviewed in this proposed rule.
SBA also seeks feedback and
suggestions on alternative standards, if
they would be more appropriate,
including whether the number of
employees is a more suitable measure of
VerDate Mar<15>2010
16:54 Feb 23, 2012
Current size
standard
($ million)
NAICS industry title
Jkt 226001
size for certain industries and what that
employee level should be.
3. SBA proposes common size
standards for industries within certain
NAICS Industry Groups, namely NAICS
6211, NAICS 6213, NAICS 6232, NAICS
6241, and NAICS 622. SBA invites
comments or suggestions along with
supporting information with respect to
the following:
a. Whether SBA should adopt
common size standards for those
industries or establish a separate size
standard for each industry,
b. Whether the proposed common size
standards for those industries are at the
correct levels or what are more
appropriate size standards if the
proposed standards are not suitable, and
c. Based on SBA’s analysis of the
industry data, too much variation exists
among the industries to retain the
current common size standards or
propose different common size
standards for several other industries
that currently have common size
standards. SBA welcomes comments on
whether it should adopt common size
standards for other industries in NAICS
Sector 62, and if so, how those
industries are related so that a common
size standard would be appropriate.
4. SBA’s proposed size standards are
based on its evaluation of five primary
factors: average firm size, average assets
size (as a 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 factors
and/or suggestions of other factors that
it should consider for assessing industry
characteristics when evaluating or
revising size standards. SBA also seeks
PO 00000
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34.5
34.5
34.5
13.5
10.0
7.0
13.5
7.0
7.0
7.0
7.0
7.0
7.0
7.0
7.0
7.0
7.0
Proposed size
standard
($ million)
35.5
35.5
35.5
25.5
14.0
14.0
25.5
10.0
10.0
10.0
10.0
10.0
10.0
10.0
14.0
30.0
10.0
information on relevant data sources,
other than those used by the Agency, if
available.
5. SBA gives equal weight to each of
the five primary factors in all industries.
SBA seeks feedback on whether it
should continue giving equal weight to
each factor or whether it should give
more weight to one or more factors for
certain industries. Recommendations to
weigh some factors more than others
should include suggestions on the
specific weight for each factor for those
industries along with supporting
information.
6. For some industries, based on its
analysis of industry and program data
alone, SBA proposes to increase the
existing size standards by a large
amount (such as NAICS 621511, NAICS
621991, NAICS 623110, and NAICS
624230), while for others the proposed
increases are modest. SBA seeks
feedback on whether, as a policy, it
should limit the increase to a size
standard or establish minimum or
maximum values for its size standards.
SBA seeks suggestions on appropriate
levels of changes to size standards and
on their minimum or maximum levels.
7. For analytical simplicity and
efficiency, in this proposed rule, SBA
has refined its size standard
methodology to obtain a single value as
a proposed size standard instead of a
range of values, as in its past size
regulations. SBA welcomes any
comments on this procedure and
suggestions on alternative methods.
Public comments on the above issues
are very valuable to SBA for validating
its size standard methodology and
proposed size standards revisions in
this proposed rule. This will help SBA
to move forward with its review of size
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standards for other NAICS Sectors.
Commenters addressing size standards
for a specific industry or a group of
industries should include relevant data
and/or other information supporting
their comments. If comments relate to
using size standards for Federal
procurement programs, SBA suggests
that commenters provide information on
the size of contracts, the size of
businesses that can undertake the
contracts, start-up costs, equipment and
other asset requirements, the amount of
subcontracting, other direct and indirect
costs associated with the contracts, the
use of mandatory sources of supply for
products and services, and the degree to
which contractors can mark up those
costs.
Compliance With Executive Orders
12866, 13563, 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. 801,
et seq.
mstockstill on DSK4VPTVN1PROD with PROPOSALS
Regulatory Impact Analysis
1. Is there a need for the regulatory
action?
SBA believes that the proposed size
standards revisions for a number of
industries in NAICS Sector 62, Health
Care and Social Assistance, will better
reflect the economic characteristics of
small businesses and the Federal
Government marketplace. SBA’s
mission is to aid and assist small
businesses through a variety of
financial, procurement, business
development, and advocacy programs.
To assist 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 size definitions. The Act also
requires that small business size
definitions vary to reflect industry
differences. The recently enacted Jobs
Act also requires SBA to review all size
standards and make necessary
adjustments to reflect market
conditions. The supplementary
information section of this proposed
rule explains SBA’s methodology for
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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 because of this rule is gaining
eligibility for Federal small business
assistance programs. These include
SBA’s financial assistance programs,
economic injury disaster loans, and
Federal procurement programs intended
for small businesses. Federal
procurement programs provide targeted
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 (WOSB), and servicedisabled veteran-owned small business
concerns (SDVO SBC). Federal agencies
may also use SBA size standards for a
variety of other regulatory and program
purposes. These programs assist small
businesses to become more
knowledgeable, stable, and competitive.
In the 28 industries in NAICS Sector 62
for which SBA has proposed increasing
size standards, SBA estimates that more
than 4,100 additional firms will obtain
small business status and become
eligible for these programs. That number
is about 0.7 percent of the total number
of firms that are classified as small
under the current standards in all
industries within NAICS Sector 62. If
adopted as proposed, this will increase
the small business share of total
industry receipts in all industries within
NAICS Sector 62 from about 30 percent
under the current size standards to
nearly 32 percent.
Three groups will benefit from the
proposed size standards revisions in
this rule, if they are adopted as
proposed: (1) Some businesses that are
above the current size standards may
gain small business status under the
higher size standards, thereby enabling
them to participate in Federal small
business assistance programs; (2)
growing small businesses that are close
to exceeding the current size standards
will be able to retain their small
business status under the higher size
standards, thereby enabling them to
continue their participation in the
programs; and (3) Federal agencies will
have larger pools of small businesses
from which to draw for their small
business procurement programs.
During fiscal years 2008 to 2010,
about 66 percent of Federal contracting
dollars spent in industries in NAICS
Sector 62 were accounted for by the 28
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industries for which SBA has proposed
to increase size standards. SBA
estimates that additional firms gaining
small business status in those industries
under the proposed size standards could
potentially obtain Federal contracts
totaling up to $25 million to $30 million
annually under SBA’s small business,
8(a), SDB, HUBZone, WOSB, and SDVO
SBC Programs, and other unrestricted
procurements. The added competition
for many of these procurements can also
result in lower prices to the Government
for procurements reserved for small
businesses, but SBA cannot quantify
this benefit.
Under SBA’s 7(a) Business Loan and
504 Programs, based on the 2008 to
2010 data, SBA estimates about 35 to 45
additional loans totaling about $11
million to $15 million in Federal loan
guarantees could be made to these
newly defined small businesses under
the proposed standards. Increasing the
size standards will likely result in more
small business guaranteed loans to
businesses in these industries, but it
would be impractical to try to estimate
exactly the number and total amount of
loans. Under the Jobs Act, SBA can now
guarantee substantially larger loans than
in the past. In addition, as described
above, the Jobs Act established an
alternative size standard ($15 million in
tangible net worth and $5 million in net
income after income taxes) for business
concerns that do not meet the size
standards for their industry. Therefore,
SBA finds it similarly difficult to
quantify the impact of these proposed
standards on its 7(a) and 504 Loan
Programs.
Newly defined small businesses will
also benefit from SBA’s Economic Injury
Disaster Loan (EIDL) Program. Since this
program is contingent on the occurrence
and severity of one or more disasters,
SBA cannot make a meaningful estimate
of this impact.
To the extent that about 4,100 newly
defined additional small firms could
become active in Federal procurement
programs, the proposed changes, if
adopted, may entail some additional
administrative costs to the Federal
Government associated with additional
bidders for Federal small business
procurement opportunities. In addition,
there will be more firms seeking SBA’s
guaranteed loans, more firms eligible for
enrollment in the Central Contractor
Registration’s Dynamic Small Business
Search database, and more firms seeking
certification as 8(a) or HUBZone firms
or qualifying for small business, WOSB,
SDVO SBC, and SDB status. Among
those newly defined small businesses
seeking SBA assistance, there could be
some additional costs associated with
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compliance and verification of small
business status and protests of small
business status. SBA believes that these
added costs will be minimal because
mechanisms are already in place to
handle these administrative
requirements.
Additionally, 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 small business setaside contracting might result in
competition among fewer total bidders,
although there will be more small
businesses eligible to submit offers. In
addition, higher costs may result when
more full and open contracts are
awarded to HUBZone businesses that
receive price evaluation preferences.
However, the additional costs associated
with fewer bidders are expected to be
minor since, as by law, procurements
may be set aside for small businesses or
reserved for the 8(a), HUBZone, WOSB,
or SDVO SBC Programs only if awards
are expected to be made at fair and
reasonable prices (15 U.S.C.
637(a)(1)(D)(i)(I), 644(a), 657a(b)(2)(b),
and 657f(b)). The proposed size
standards revisions, if adopted, may
have distributional effects among large
and small businesses. Although SBA
cannot estimate with certainty the
actual outcome of the gains and losses
among small and large businesses, it can
identify several probable impacts. There
may 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. In addition, some Federal
contracts may be awarded to HUBZone
concerns instead of large businesses
since these firms may be eligible for a
price evaluation preference for contracts
when they compete on a full and open
basis. 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. SBA cannot estimate the
potential distributional impacts of these
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Jkt 226001
transfers with any degree of precision
because FPDS–NG data only identify the
size of businesses receiving Federal
contracts as ‘‘small businesses’’ or
‘‘other than small businesses’’; FPDS–
NG does not provide the exact size of
the business.
The proposed revisions to the existing
size standards for Industries in NAICS
Sector 62 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 13563
A description of the need for this
regulatory action and benefits and costs
associated with this action including
possible distributional impacts that
relate to Executive Order 13563 are
included above in the Regulatory Impact
Analysis under Executive Order 12866.
In an effort to engage interested
parties in this action, SBA has presented
its methodology (discussed above under
SUPPLEMENTARY INFORMATION) to various
industry associations and trade groups.
SBA also met with various industry
groups to get their feedback on its
methodology and other size standards
issues. In addition, SBA presented its
size standards methodology to
businesses in 13 cities in the U.S. and
sought their input as part of Jobs Act
tours. The presentation also included
information on the latest status of the
comprehensive size standards review
and on how interested parties can
provide SBA with input and feedback
on size standards.
Additionally, SBA sent letters to the
Directors of the Offices of Small and
Disadvantaged Business Utilization
(OSDBU) at several Federal agencies
with considerable procurement
responsibilities requesting their
feedback on how the agencies use SBA
size standards and whether current
standards meet their programmatic
needs (both procurement and nonprocurement). SBA gave appropriate
consideration to all input, suggestions,
recommendations, and relevant
information obtained from industry
groups, individual businesses, and
Federal agencies in preparing this
proposed rule.
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11015
The review of size standards in
NAICS Sector 62, Health Care and
Social Assistance, is consistent with
Executive Order 13563, Section 6,
calling for retrospective analyses of
existing rules. The last comprehensive
review of size standards occurred
during the late 1970s and early 1980s.
Since then, except for periodic
adjustments for monetary based size
standards, most reviews of size
standards were limited to a few specific
industries in response to requests from
the public and Federal agencies. SBA
recognizes that changes in industry
structure and the Federal marketplace
over time have rendered existing size
standards for some industries no longer
supportable by current data.
Accordingly, in 2007, SBA began a
comprehensive review of its size
standards to ensure that existing size
standards have supportable bases and it
will revise them when necessary. In
addition, the Jobs Act requires SBA to
conduct a detailed review of all size
standards and to make appropriate
adjustments to reflect market
conditions. Specifically, the Jobs Act
requires SBA to conduct a detailed
review of at least one-third of all size
standards during every 18-month period
from the date of its enactment and do a
complete review of all size standards
not less frequently than once every
5 years thereafter.
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 the purposes of Executive Order
13132, SBA has determined that this
proposed rule will not have substantial,
direct effects on the States, on the
relationship between the national
government and the States, or on the
distribution of power and
responsibilities among the various
levels of government. Therefore, SBA
has determined that this proposed rule
has no federalism implications
warranting preparation of a federalism
assessment.
Paperwork Reduction Act
For the purposes of the Paperwork
Reduction Act, 44 U.S.C. Ch. 35, SBA
has determined that this rule will not
impose any new reporting or record
keeping requirements.
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Initial Regulatory Flexibility Analysis
Under the Regulatory Flexibility Act
(RFA), this proposed rule, if finalized,
may have a significant impact on a
substantial number of small businesses
in NAICS Sector 62, Health Care and
Social Assistance. As described above,
this rule may affect small businesses
seeking Federal contracts, loans under
SBA’s 7(a), 504 Guaranteed Loan and
Economic Injury Disaster Loan
Programs, and assistance under other
Federal small business programs.
Immediately below, SBA sets forth an
initial regulatory flexibility analysis
(IRFA) of this proposed rule addressing
the following questions: (1) What are the
need for and objective of the rule? (2)
What are SBA’s description and
estimate of the number of small
businesses to which the rule will apply?
(3) What are the projected reporting,
record keeping, and other compliance
requirements of the rule? (4) What are
the relevant Federal rules that may
duplicate, overlap, or conflict with the
rule? and (5) What alternatives will
allow the Agency to accomplish its
regulatory objectives while minimizing
the impact on small businesses?
1. What are the need for and objective
of the rule?
Although size standards for three
Subsectors of NAICS 62 (NAICS
Subsector 621, Ambulatory Health Care
Services; NAICS Subsector 622,
Hospitals; and NAICS Subsector 623,
Nursing and Residential Care Facilities)
were reviewed during 1999–2000, size
standards for NAICS Subsector 624,
Social Assistance, which includes nine
industries, have not been reviewed
since the early 1980s. Changes in
industry structure, technological
changes, productivity growth, mergers
and acquisitions, and updated industry
definitions may have changed the
structure of many industries within
NAICS Sector 62. Such changes can be
sufficient to support revisions to current
size standards for some industries.
Based on the analysis of the latest data
available, SBA believes that the revised
standards in this proposed rule more
appropriately reflect the size of
businesses in those industries that need
Federal assistance. The recently enacted
Jobs Act also requires SBA to review all
size standards and make necessary
adjustments to reflect market
conditions.
2. What are SBA’s description and
estimate of the number of small
businesses to which the rule will apply?
If the proposed rule is adopted in its
present form, SBA estimates that more
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than 4,100 additional firms will become
small because of increases in size
standards in 28 industries in NAICS
Sector 62. That represents 0.7 percent of
total firms that are small under current
size standards in all industries within
that Sector. This will result in an
increase in the small business share of
total industry receipts for the Sector
from about 30 percent under the current
size standard to nearly 32 percent under
the proposed standards. The proposed
standards, if adopted, will enable more
small businesses to retain their small
business status for a longer period.
Many have lost their eligibility and find
it difficult to compete at current size
standards with companies that are
significantly larger than they are. SBA
believes the competitive impact will be
positive for existing small businesses
and for those that exceed the size
standards but are on the very low end
of those that are not small. They might
otherwise be called or referred to as
mid-sized businesses, although SBA
only defines what is small; other entities
are other than small.
3. What are the projected reporting,
recordkeeping and other compliance
requirements of the rule?
The proposed size standards changes
do not impose any additional reporting
or recordkeeping requirements on small
businesses. However, qualifying for
Federal procurement and a number of
other programs requires that businesses
register in the CCR database and certify
at least once annually that they are
small in the Online Representations and
Certifications Application (ORCA).
Therefore, businesses opting to
participate in those programs must
comply with CCR and ORCA
requirements. There are no costs
associated with either CCR registration
or ORCA certification. Changing 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.
4. What are the relevant Federal rules
which may duplicate, overlap, or
conflict with the rule?
Under § 3(a)(2)(C) of the Small
Business Act, 15 U.S.C. 632(a)(2)(c),
Federal agencies must use SBA’s size
standards to define a small business,
unless specifically authorized by statute
to do otherwise. In 1995, SBA published
in the Federal Register a list of statutory
and regulatory size standards that
identified the application of SBA’s size
standards as well as other size standards
used by Federal agencies (60 FR 57988
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(November 24, 1995)). SBA is not aware
of any Federal rule that would duplicate
or conflict with establishing size
standards.
However, the Small Business Act and
SBA’s regulations allow Federal
agencies to develop different size
standards if they believe that SBA’s size
standards are not appropriate for their
programs, with the approval of SBA’s
Administrator (13 CFR 121.903). The
Regulatory Flexibility Act authorizes an
Agency to establish an alternative small
business definition, after consultation
with the Office of Advocacy of the U.S.
Small Business Administration (5 U.S.C.
601(3)).
5. What alternatives will allow the
Agency to accomplish its regulatory
objectives while minimizing the impact
on small entities?
By law, SBA is required to develop
numerical size standards for
establishing eligibility for Federal small
business assistance programs. Other
than varying size standards by industry
and changing the size measures, no
practical alternative exists to the
systems of numerical size standards.
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 part
13 CFR part 121 as follows:
PART 121—SMALL BUSINESS SIZE
REGULATIONS
1. The authority citation for part 121
is revised to read as follows:
Authority: 15 U.S.C. 632, 634(b)(6), 636(b),
662, and 694a(9).
2. In § 121.201, in the table, revise the
entries for ‘‘621420’’, ‘‘621491’’,
‘‘621492’’, ‘‘621493’’, ‘‘621498’’,
‘‘621511’’, ‘‘621512’’, ‘‘621610’’,
‘‘621910’’, ‘‘621991’’, ‘‘621999’’,
‘‘622110’’, ‘‘622210’’, ‘‘622310’’,
‘‘623110’’, ‘‘623210’’, ‘‘623220’’,
‘‘623311’’, ‘‘623312’’, ‘‘623990’’,
‘‘624110’’, ‘‘624120’’, ‘‘624190’’,
‘‘624210’’, ‘‘624221’’, ‘‘624229’’,
‘‘624230’’, and ‘‘624310’’ to read as
follows:
§ 121.201 What size standards has SBA
identified by North American Industry
Classification System codes?
*
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*
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SMALL BUSINESS SIZE STANDARDS BY NAICS INDUSTRY
NAICS codes
621420
621491
621492
621493
621498
621511
621512
621610
621910
621991
621999
Size standards in
millions of dollars
NAICS U.S. industry title
*
*
........................................
........................................
........................................
........................................
........................................
........................................
........................................
........................................
........................................
........................................
........................................
*
*
*
Outpatient Mental Health and Substance Abuse Centers .............
HMO Medical Centers ....................................................................
Kidney Dialysis Centers .................................................................
Freestanding Ambulatory Surgical and Emergency Centers .........
All Other Outpatient Care Centers .................................................
Medical Laboratories ......................................................................
Diagnostic Imaging Centers ...........................................................
Home Health Care Services ..........................................................
Ambulance Services .......................................................................
Blood and Organ Banks .................................................................
All Other Miscellaneous Ambulatory Health Care Services ..........
*
Size standards in
number of
employees
$14.0
30.0
35.5
14.0
19.0
30.0
14.0
14.0
14.0
30.0
14.0
*
................................
................................
................................
................................
................................
................................
................................
................................
................................
................................
................................
35.5
35.5
35.5
*
................................
................................
................................
25.5
14.0
14.0
25.5
10.0
10.0
................................
................................
................................
................................
................................
................................
10.0
10.0
10.0
10.0
10.0
14.0
30.0
10.0
*
................................
................................
................................
................................
................................
................................
................................
................................
Subsector 622—Hospitals
*
*
622110 ........................................
622210 ........................................
622310 ........................................
*
*
*
General Medical and Surgical Hospitals ........................................
Psychiatric and Substance Abuse Hospitals .................................
Specialty (except Psychiatric and Substance Abuse) Hospitals ...
*
Subsector 623—Nursing and Residential Care Facilities
623110
623210
623220
623311
623312
623990
........................................
........................................
........................................
........................................
........................................
........................................
Nursing Care Facilities ...................................................................
Residential Mental Retardation Facilities .......................................
Residential Mental Health and Substance Abuse Facilities ..........
Continuing Care Retirement Communities ....................................
Homes for the Elderly ....................................................................
Other Residential Care Facilities ...................................................
Subsector 624—Social Assistance
624110
624120
624190
624210
624221
624229
624230
624310
*
*
........................................
........................................
........................................
........................................
........................................
........................................
........................................
........................................
*
*
*
*
Child and Youth Services ...............................................................
Services for the Elderly and Persons with Disabilities ..................
Other Individual and Family Services ............................................
Community Food Services .............................................................
Temporary Shelters ........................................................................
Other Community Housing Services ..............................................
Emergency and Other Relief Services ...........................................
Vocational Rehabilitation Services .................................................
*
*
Dated: December 21, 2011.
Karen G. Mills,
Administrator.
*
*
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
[FR Doc. 2012–4329 Filed 2–23–12; 8:45 am]
14 CFR Part 39
BILLING CODE 8025–01–P
[Docket No. FAA–2010–1095; Directorate
Identifier 2009–NE–40–AD]
mstockstill on DSK4VPTVN1PROD with PROPOSALS
RIN 2120–AA64
Airworthiness Directives; Pratt &
Whitney (PW) Models PW4074 and
PW4077 Turbofan Engines
Federal Aviation
Administration (FAA), DOT.
ACTION: Notice of proposed rulemaking
(NPRM).
AGENCY:
We propose to supersede an
existing airworthiness directive (AD)
SUMMARY:
VerDate Mar<15>2010
16:54 Feb 23, 2012
Jkt 226001
PO 00000
Frm 00037
Fmt 4702
*
Sfmt 4702
*
*
that applies to all PW PW4074 and
PW4077 turbofan engines. The existing
AD currently requires removing the 15th
stage high pressure compressor (HPC)
disk within 12,000 cycles since new
(CSN) or using a drawdown removal
plan for disks that exceed 12,000 CSN.
Since we issued that AD, we received a
request from an operator that we clarify
our inspection schedule for 15th stage
HPC disks. This proposed AD would
clarify that 15th stage HPC disks that
have accumulated more than 9,685 CSN
require a borescope inspection (BSI) or
eddy current inspection (ECI) of the disk
outer rim front rail for cracks prior to
accumulating 12,000 CSN. We are
proposing this AD to prevent cracks
from propagating into the disk bolt
holes, which could result in a failure of
E:\FR\FM\24FEP1.SGM
24FEP1
]]>Agencies
[Federal Register Volume 77, Number 37 (Friday, February 24, 2012)]
[Proposed Rules]
[Pages 11001-11017]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-4329]
=======================================================================
-----------------------------------------------------------------------
SMALL BUSINESS ADMINISTRATION
13 CFR Part 121
RIN 3245-AG30
Small Business Size Standards: Health Care and Social Assistance
AGENCY: U.S. Small Business Administration.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: The U.S. Small Business Administration (SBA) proposes to
increase small business size standards for 28 industries in North
American Industry Classification System (NAICS) Sector 62, Health Care
and Social Assistance. As part of its ongoing comprehensive review of
all size standards, SBA has evaluated all size standards in NAICS
Sector 62 to determine whether the existing size standards should be
retained or revised. This proposed rule is one of a series of proposed
rules that will review size standards of industries grouped by NAICS
Sector. SBA issued a White Paper entitled ``Size Standards
Methodology'' and published a notice in the October 21, 2009 issue of
the Federal Register that the ``Size Standards Methodology'' White
Paper was available on its Web site at www.sba.gov/size for public
review and comments (74 FR 53940). The ``Size Standards Methodology''
White Paper explains how SBA establishes, reviews, and modifies its
receipts based and employee based small business size standards. In
this proposed rule, SBA has applied its methodology that pertains to
establishing, reviewing, and modifying a receipts based size standard.
DATES: SBA must receive comments to this proposed rule on or before
April 24, 2012.
ADDRESSES: You may submit comments, identified by RIN 3245-AG30 by one
of the following methods: (1) Federal eRulemaking Portal:
www.regulations.gov, following the instructions for submitting
comments; or (2) Mail/Hand Delivery/Courier: Khem R. Sharma, Ph.D.,
Chief, Size Standards Division, 409 Third Street SW., Mail Code 6530,
Washington, DC 20416. SBA will not accept comments to this proposed
rule submitted by email.
SBA will post all comments to this proposed rule without change on
www.regulations.gov. If you wish to submit confidential business
information (CBI) as defined in the User Notice at www.regulations.gov,
you must submit such information to U.S. Small Business Administration,
Khem R. Sharma, Ph.D., Chief, 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 your information and determine whether it
will make the information public or not.
FOR FURTHER INFORMATION CONTACT: Khem R. Sharma, Ph.D., Chief, Size
Standards Division, (202) 205-6618 or sizestandards@sba.gov.
SUPPLEMENTARY INFORMATION: To determine eligibility for Federal small
business assistance, SBA establishes small business size definitions
(referred to as size standards) for private sector industries in the
United States. SBA uses two primary measures of business size: average
annual receipts and average number of employees. SBA uses financial
assets, electric output, and refining capacity to measure the size of a
few specialized industries. In addition, SBA's Small Business
Investment Company (SBIC), Certified Development Company (504), and
7(a) Loan Programs use either the industry based size standards or net
worth and net income based alternative size standards to determine
eligibility for those programs. At the beginning of the current
comprehensive size standards review, there were 41 different size
standards covering 1,141 NAICS industries and 18 sub-industry
activities (referred to as ``exceptions'' in SBA's table of size
standards). Thirty-one of these size levels were based on average
annual receipts, seven were based on average number of employees, and
three were based on other measures.
Over the years, SBA has received comments that its size standards
have not kept up with changes in the
[[Page 11002]]
economy, in particular the changes in the Federal contracting
marketplace and industry structure. The last time SBA conducted a
comprehensive review of all size standards was during the late 1970s
and early 1980s. Since then, most reviews of size standards were
limited to a few specific industries in response to requests from the
public and Federal agencies. SBA also reviews the effect of inflation
on its size standards and makes necessary adjustments to its monetary
based size standards at least once every five years. SBA's latest
inflation adjustment to size standards was published in the Federal
Register on July 18, 2008 (73 FR 41237).
SBA proposed new size standards for a number of industries in NAICS
Sector 62 on May 4, 1999 (64 FR 23798), when the Standard Industrial
Classification (SIC) System was in use. Subsequently, effective October
1, 2000, SBA adopted NAICS as the basis for small business size
standards, thereby replacing the SIC System. Therefore, when SBA issued
a final rule on November 17, 2000 (65 FR 69432), the adopted size
standards in the final rule were based on the NAICS. The industries
that are now in NAICS Subsector 621(Ambulatory Health Care Services),
NAICS Subsector 622 (Hospitals), and NAICS Subsector 623 (Nursing and
Residential Care Facilities) were part of SIC Major Industry Group 80,
Health Services, while industries now in NAICS Subsector 624 (Social
Assistance) were part of the SIC Major Industry Group 83, Social
Services.
Because of changes in the Federal marketplace and industry
structure since the last comprehensive size standards review, SBA
recognizes that current data may no longer support some of its existing
size standards. Accordingly, in 2007, SBA began a comprehensive review
of all size standards to determine if they are consistent with current
data, and to adjust them when necessary. In addition, on September 27,
2010, the President of the United States signed the Small Business Jobs
Act of 2010 (Jobs Act). The Jobs Act directs SBA to conduct a detailed
review of all size standards and to make appropriate adjustments to
reflect market conditions (Sec. 1344, Pub. L. 111-240, 124 Stat. 2545).
Specifically, the Jobs Act requires SBA to conduct a detailed review of
at least one-third of all size standards during every 18-month period
from the date of its enactment . In addition, the Jobs Act requires
that SBA conduct a review of all size standards not less frequently
than once every five years thereafter. Reviewing existing small
business size standards and making appropriate adjustments based on
current data are also consistent with Executive Order 13563 on
improving regulation and regulatory review.
Rather than review all size standards at one time, SBA is reviewing
size standards on a Sector by Sector basis. A NAICS Sector generally
consists of 25 to 75 industries, except for NAICS Sector 31-33,
Manufacturing, which has considerably more industries. Once SBA
completes its review of size standards for industries in a NAICS
Sector, it issues a proposed rule to revise size standards for those
industries for which it believes currently available data and other
relevant factors support doing so.
Below is a discussion of the size standards methodology for
establishing receipts based size standards that SBA applied to this
proposed rule, including analyses of industry structure, Federal
procurement trends and other factors for industries reviewed in this
proposed rule, the impact of the proposed revisions to size standards
on Federal small business assistance, and the evaluation of whether a
revised size standard would exclude dominant firms from being
considered small.
Size Standards Methodology
As stated above, SBA has developed a ``Size Standards Methodology''
for developing, reviewing, and modifying size standards when necessary.
SBA has published the document on its Web site at www.sba.gov/size for
public review and comments and included it as a supporting document in
the electronic docket of this proposed rule at www.regulations.gov. SBA
does not apply all features of its ``Size Standards Methodology'' to
all industries because not all features are appropriate. For example,
since all industries in NAICS Sector 62 have receipts based size
standards, the methodology described in this proposed rule applies to
establishing receipts based size standards. However, the methodology is
made available in its entirety for parties who have an interest in
SBA's overall approach to establishing, evaluating, and modifying small
business size standards. SBA always explains its analysis in individual
proposed and final rules relating to size standards for specific
industries.
SBA welcomes comments from the public on a number of issues
concerning its ``Size Standards Methodology,'' such as whether there
are other approaches to establishing and modifying size standards;
whether there are alternative or additional factors that SBA should
consider; whether SBA's approach to small business size standards makes
sense in the current economic environment; whether SBA's use of anchor
size standards is appropriate; whether there are gaps in SBA's
methodology because the data it uses are not current or sufficiently
comprehensive; and whether there are other data, facts, and/or issues
that SBA should consider. Comments on SBA's methodology should be
submitted via (1) the Federal eRulemaking Portal: www.regulations.gov,
using docket number SBA-2009-0008 and following the instructions for
submitting comments; or (2) Mail/Hand Delivery/Courier: Khem R. Sharma,
Ph.D., Chief, Size Standards Division, 409 Third Street SW., Mail Code
6530, Washington, DC 20416. As with comments received to this and other
proposed rules, SBA will post all comments on its methodology on
www.regulations.gov. As of December 9, 2011, SBA has received 13
comments to its ``Size Standards Methodology.'' The comments are
available to the public at www.regulations.gov. SBA continues to
welcome comments on its methodology from interested parties. SBA will
not accept comments to its ``Size Standards Methodology'' submitted by
email.
Congress granted SBA's Administrator discretion to establish
detailed small business size standards. 15 U.S.C. 632(a)(2).
Specifically, Section 3(a)(3) of the Small Business Act requires that
``* * * the [SBA] Administrator shall ensure that the size standard
varies from industry to industry to the extent necessary to reflect the
differing characteristics of the various industries and consider other
factors deemed to be relevant by the Administrator.'' 15 U.S.C.
632(a)(3). Accordingly, the economic structure of an industry is the
basis for developing and modifying small business size standards. SBA
identifies the small business segment of an industry by examining data
on the economic characteristics defining the industry structure (as
described below). In addition, SBA considers current economic
conditions, its mission and program objectives, the Administration's
current policies, suggestions from industry groups and Federal
agencies, and public comments on the proposed rule. SBA also examines
whether a size standard based on industry and other relevant data
successfully excludes businesses that are dominant in the industry.
This proposed rule includes information regarding the factors SBA
evaluated and the criteria it used to propose adjustments to certain
size standards in NAICS Sector 62. The rule also explains why SBA has
proposed to adjust some size standards in NAICS Sector 62 but not
others. This proposed rule affords the public an opportunity to
[[Page 11003]]
review and to comment on SBA's proposals to revise size standards in
NAICS Sector 62, as well as on the data and methodology it uses to
evaluate and revise a size standard. The public can also comment on
those industries for which SBA did not propose changes to their size
standards.
Industry Analysis
For the current comprehensive size standards review, SBA has
established three ``base'' or ``anchor'' size standards: $7 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 manufacturing
industries at its inception in 1953. Shortly thereafter SBA established
$1 million in average annual receipts as the anchor size standard for
nonmanufacturing industries. SBA has periodically increased the
receipts based anchor size standard for inflation, and today it is $7
million. Since 1986, the size standard for all industries in the
Wholesale Trade Sector for SBA financial assistance and for most
Federal programs has been 100 employees. However, the 100 employee size
standards do not apply to Federal procurement programs. Rather, for
Federal procurement the size standard for all industries in Wholesale
Trade and for all industries in Retail Trade (NAICS Sector 44-45) is
500 employees under SBA's nonmanufacturer rule. See 13 CFR 121.406(b).
These long-standing anchor size standards have stood the test of
time and gained legitimacy through practice and general public
acceptance. An anchor 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, the number of
size standards might be as high as the number of industries for which
SBA establishes size standards (1,141). Furthermore, the data SBA
analyzes are static, while the U.S. economy is not. Hence, absolute
precision is impossible. Therefore, SBA presumes an anchor size
standard is appropriate for a particular industry unless that industry
displays economic characteristics that are considerably different from
others with the same anchor size standard.
When evaluating a size standard, SBA compares the economic
characteristics of the industry under review to the average
characteristics of industries with one of the three anchor size
standards (referred to as the ``anchor comparison group''). This allows
SBA to assess the industry structure and to determine whether the
industry is appreciably different from the other industries in the
anchor comparison group. If the characteristics of a specific industry
under review are similar to the average characteristics of the anchor
comparison group, the anchor size standard is generally appropriate for
that industry. SBA may consider adopting a size standard below the
anchor 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, then a size standard higher
than the anchor size standard may be 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 a size standard above the anchor
size standard, SBA analyzes the characteristics of a second comparison
group. For industries with receipts based size standards, including
those in NAICS Sector 62 that are the subject of this proposed rule,
SBA developed a second comparison group consisting of industries that
have the highest levels of receipts based size standards. To determine
a size standard above the anchor size standard, SBA analyzes the
characteristics of this second comparison group. The size standards for
this group of industries range from $23 million to $35.5 million in
average annual receipts; the weighted average size standard for the
group is $29 million. SBA refers to this comparison group as the
``higher level receipts based size standard group.''
The primary industry factors that SBA evaluates include average
firm size, startup costs and entry barriers, industry competition, and
distribution of firms by size. SBA evaluates, as an additional primary
factor, the impact that revising size standards might have on Federal
contracting assistance to small businesses. These are, generally, the
five most important factors SBA examines when establishing or revising
a size standard for an industry. However, SBA will also consider and
evaluate other information that it believes is relevant to a particular
industry (such as technological changes, growth trends, SBA financial
assistance, other program factors, etc.). SBA also considers the
possible impacts of size standard revisions on eligibility for Federal
small business assistance, current economic conditions, the
Administration's policies, and suggestions from industry groups and
Federal agencies. Public comments on a proposed rule also provide
important additional information. SBA thoroughly reviews all public
comments before making a final decision on its proposed size standards.
Below are brief descriptions of each of the five primary factors that
SBA has evaluated for each industry in NAICS Sector 62 being reviewed
in this proposed rule. A more detailed description of this analysis is
provided in SBA's ``Size Standards Methodology,'' available at https://www.sba.gov/size.
1. Average firm size. SBA computes two measures of average firm
size: simple average and weighted average. For industries with receipts
based size standards, the simple average is the total receipts of the
industry divided by the total number of firms in the industry. The
weighted average firm size is the sum of weighted simple averages in
different receipts size classes, where weights are the shares of total
industry receipts for respective size classes. The simple average
weighs all firms within an industry equally regardless of their size.
The weighted average overcomes that limitation by giving more weight to
larger firms.
If the average firm size of an industry is significantly higher
than the average firm size of industries in the anchor comparison
industry group, this will 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 will be a basis to adopt the anchor size
standard, or in rare cases, a standard lower than the anchor.
2. Startup costs and entry barriers. Startup costs reflect a firm's
initial size in an industry. New entrants to an industry must have
sufficient capital and other assets to start and maintain a viable
business. If new firms entering a particular industry have greater
capital requirements than firms in industries in the anchor comparison
group, this can
[[Page 11004]]
be a basis for establishing a size standard higher than the anchor size
standard. In lieu of actual startup costs data, SBA uses average assets
as a proxy to measure the capital requirements for new entrants to an
industry.
To calculate average assets, SBA begins with the sales to total
assets ratio for an industry from the Risk Management Association's
Annual eStatement Studies. SBA then applies these ratios to the average
receipts of firms in that industry. An industry with average assets
that are significantly higher than those of the anchor comparison group
is likely to have higher startup costs; this in turn will support a
size standard higher than the anchor. Conversely, an industry with
average assets that are similar to or lower than those of the anchor
comparison group is likely to have lower startup costs; this will
support the anchor standard or one lower than the anchor.
3. Industry competition. Industry competition is generally measured
by the share of total industry receipts generated by the largest firms
in an industry. SBA generally evaluates the share of industry receipts
generated by the four largest firms in each industry. This is referred
to as the ``four-firm concentration ratio,'' a commonly used economic
measure of market competition. SBA compares the four-firm concentration
ratio for an industry 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, all else being equal, SBA will establish a
size standard higher than the anchor size standard. SBA does 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-firm
concentration ratio is 40 percent or more, 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
most of an industry's economic activity is attributable to smaller
firms, this generally indicates that small businesses are competitive
in that industry. This can support adopting the anchor size standard.
If most of an industry's economic activity is attributable to larger
firms, this indicates that small businesses are not competitive in that
industry. This can support adopting a size standard above the anchor.
Concentration is a measure of inequality of distribution. To
determine the degree of inequality of distribution in an industry, SBA
computes the Gini coefficient by constructing the Lorenz curve. The
Lorenz curve presents the cumulative percentages of units (firms) along
the horizontal axis and the cumulative percentages of receipts (or
other measures of size) along the vertical axis. (For further detail,
please refer to SBA's ``Size Standards Methodology'' on its Web site at
www.sba.gov/size.) Gini coefficient values vary from zero to one. If
receipts are distributed equally among all the firms in an industry,
the value of the Gini coefficient will equal zero. If an industry's
total receipts are attributed to a single firm, the Gini coefficient
will equal one.
SBA compares the Gini coefficient value for an industry with that
for industries in the anchor comparison group. If the Gini coefficient
value for an industry is higher than it is for industries in the anchor
comparison industry group, all else being equal, this may warrant a
higher size standard than the anchor. Conversely, if an industry's Gini
coefficient is similar to or lower than that for the anchor group, the
anchor standard, or in some cases a standard lower than the anchor, may
be adopted.
5. Impact on Federal contracting and SBA loan programs. SBA
examines the possible impact a size standard change may have on Federal
small business assistance. This most often focuses on the share of
Federal contracting dollars awarded to small businesses in the industry
in question. In general, if the small business share of Federal
contracting in an industry with significant Federal contracting is
appreciably less than the small business share of the industry's total
receipts, there is justification for considering a size standard higher
than the existing size standard. The disparity between the small
business Federal market share and industry-wide small business share
may be due to various factors, such as extensive administrative and
compliance requirements associated with Federal contracts, the
different skill set required by Federal contracts as compared to
typical commercial contracting work, and the size of Federal contracts.
These, as well as other factors, are likely to influence the type of
firms within an industry that compete for Federal contracts. By
comparing the small business Federal contracting share with the
industry-wide small business share, SBA includes in its size standards
analysis the latest Federal contracting trends. This analysis may
support a size standard larger than the current size standard.
SBA considers Federal contracting trends in the size standards
analysis only if (1) the small business share of Federal contracting
dollars is at least 10 percent lower than the small business share of
total industry receipts, and (2) the amount of total Federal
contracting averages $100 million or more during the latest three
fiscal years. These thresholds reflect significant levels of
contracting where a revision to a size standard may have an impact on
contracting opportunities to small businesses.
Besides the impact on small business Federal contracting, SBA also
evaluates the impact of a proposed size standard revision on SBA's loan
programs. For this, SBA examines the volume and number of SBA's
guaranteed loans within an industry and the size of firms obtaining
those loans. This allows SBA to assess whether the existing or the
proposed size standard for a particular industry may restrict the level
of financial assistance to small firms. If the analysis shows that the
current size standards have impeded financial assistance to small
businesses, higher size standards may be supportable. However, if small
businesses under current size standards have 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 than the existing size standards, this factor is not
considered for determining the size standard.
Sources of Industry and Program Data
SBA's primary source of industry data used in this proposed rule is
a special tabulation of the 2007 Economic Census (see www.census.gov/econ/census07/) prepared by the U.S. Bureau of the Census (Census
Bureau) for SBA. The 2007 Economic Census data are the latest
available. The special tabulation provides SBA with data on the number
of firms, number of establishments, number of employees, annual
payroll, and annual receipts of companies by NAICS Sector (2-digit
level), Subsector (3-digit level), Industry Group (4-digit level),
Industry (6-digit level). These data are arrayed by various classes of
firms' size based on the overall number of employees and receipts of
the entire enterprise (all establishments and affiliated firms) from
all industries. The
[[Page 11005]]
special tabulation enables SBA to evaluate average firm size, the four-
firm concentration ratio, and distribution of firms by various receipts
and employment size classes.
In some cases, where data were not available due to disclosure
prohibitions in the Census Bureau's tabulation, SBA either estimated
missing values using available relevant data or examined data at a
higher level of industry aggregation, such as at the NAICS 2-digit
(Sector), 3-digit (Subsector), or 4-digit (Industry Group) level. In
some instances, SBA's analysis was based only on those factors for
which data were available or estimates of missing values were possible.
To calculate average assets, SBA used sales to total assets ratios
from the Risk Management Association's Annual eStatement Studies (see
https://www.statementstudies.org/) from 2008 to 2010.
To evaluate Federal contracting trends, SBA examined data on
Federal contract awards for fiscal years 2008 to 2010. The data are
available from the U.S. General Service Administration's Federal
Procurement Data System--Next Generation (FPDS-NG).
To assess the impact on financial assistance to small businesses,
SBA examined data on its own guaranteed loan programs for fiscal years
2008 to 2010.
Data sources and estimation procedures SBA uses in its size
standards analysis are documented in detail in SBA's ``Size Standards
Methodology'' White Paper, which is available at www.sba.gov/size.
Dominance in Field of Operation
Section 3(a) of the Small Business Act (15 U.S.C. 632(a)) defines a
small business concern as one that is (1) Independently owned and
operated, (2) not dominant in its field of operation, and (3) within a
specific small business definition or size standard established by the
SBA Administrator. SBA considers as part of its evaluation whether a
business concern at a proposed size standard would be dominant in its
field of operation. For this, SBA generally examines the industry's
market share of firms at the proposed standard. Market share and other
factors may indicate whether a firm can exercise a major controlling
influence on a national basis in an industry where a significant number
of business concerns are engaged. If a contemplated size standard
includes a dominant firm, SBA will consider a lower size standard to
exclude the dominant firm from being defined as small.
Selection of Size Standards
To simplify size standards, for the ongoing comprehensive review of
receipts based size standards, SBA has proposed to select size
standards from a limited number of 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)). At
the beginning of the current comprehensive size standards review, there
were 31 different levels of receipts based size standards. They ranged
from $0.75 million to $35.5 million, and many of them applied to one or
only a few industries. SBA believes that size standards with such a
large number of small variations among them are both unnecessary and
difficult to justify analytically. To simplify managing and using size
standards, SBA proposes that there be fewer size standard levels. This
will produce more common size standards for businesses operating in
related industries. This will also result in greater consistency among
the size standards for industries that have similar economic
characteristics.
SBA proposes, therefore, to apply one of eight ``fixed'' receipts
based size standards to each industry in NAICS Sector 62. All size
standards in NAICS Sector 62 are based on average annual receipts. The
eight ``fixed'' receipts based size standard levels are $5 million, $7
million, $10 million, $14 million, $19 million, $25.5 million, $30
million, and $35.5 million. SBA established these eight receipts based
size standard based on the current minimum, the current maximum, and
the most commonly used current receipts based size standards. At the
start of the current comprehensive review, the most commonly used
receipts based size standards clustered around the following: $2.5
million to $4.5 million, $7 million, $9 million to $10 million, $12.5
million to $14 million, $25 million to $25.5 million, and $33.5 million
to $35.5 million. SBA selected $7 million as one of eight fixed levels
of receipts based size standards because it is an anchor standard for
receipts based standards. The lowest or minimum receipts based size
level will be $5 million. Other than the size standards for agriculture
and industries with receipts based on commissions (such as real estate
brokers and travel agents), the $5 million size standard includes those
industries with the lowest receipts based standards, which ranged from
$2 million to $4.5 million at the start of comprehensive size standards
review. Among the higher level size clusters, SBA has set four fixed
levels: $10 million, $14 million, $25.5 million, and $35.5 million.
Because of large intervals between some of the fixed levels, SBA
established two intermediate levels, namely $19 million between $14
million and $25.5 million, and $30 million between $25.5 million and
$35.5 million. These two intermediate levels reflect roughly the same
proportional differences as between the other two successive levels.
To simplify size standards further, SBA may propose a common size
standard for closely related industries. Although the size standard
analysis may support a separate size standard for each industry, SBA
believes that establishing different size standards for closely related
industries may not always be appropriate. For example, in cases where
many of the same businesses operate in the same multiple industries, a
common size standard for those industries might better reflect the
Federal marketplace. This might also make size standards among related
industries more consistent than separate size standards for each of
those industries. This led SBA to establish a common size standard for
the information technology (IT) services (NAICS 541511, NAICS 541112,
NAICS 541513, NAICS 541519, and NAICS 811212), even though the industry
data might support a distinct size standard for each industry (see 57
FR 27906 (June 23, 1992)). In NAICS Sector 62, currently all industries
in NAICS Industry Group 6211 (Offices of Physicians), all industries in
NAICS Industry Group 6213 (Offices of Other Health Practitioners), and
all industries in NAICS Industry Group 6215 (Medical and Diagnostic
Laboratories) have common size standards. Similarly, all industries in
NAICS Subsector 622 (Hospitals) and all industries in NAICS Subsector
624 (Social Assistance) have common size standards. In this proposed
rule, SBA proposes to retain common size standards for NAICS Industry
Group 6211, NAICS Industry Group 6213, NAICS Subsector 622, and NAICS
Industry Group 6241 (Individual and Family Services) and proposes a new
common size standard for NAICS Industry Group 6232 (Residential Mental
Retardation, Mental Health and Substance Abuse Facilities). Whenever
SBA proposes a common size standard for closely related industries, it
will provide its justification.
Evaluation of Industry Structure
SBA evaluated the structure of the 39 industries in NAICS Sector
62, Health Care and Social Assistance, to assess the
[[Page 11006]]
appropriateness of the current size standards. As described above, SBA
compared data on the economic characteristics of each industry to the
average characteristics of industries in two comparison groups. The
first comparison group consists of all industries with a size standard
of $7 million size and is referred to as the ``receipts based anchor
comparison group.'' Because the goal of SBA's size standards review is
to assess whether a specific industry's size standard should be the
same as or different from the anchor size standard, this is the most
logical group of industries to analyze. 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 are similar to the average
characteristics of industries in the anchor comparison group, the
anchor size standard is generally considered appropriate for that
industry. If an industry's structure is significantly different from
industries in the anchor group, a size standard lower or higher than
the anchor size standard might be appropriate. The level of the new
size standard is 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. The average size
standard for this group is $29 million. SBA refers to this group of
industries as the ``higher level receipts based size standard
comparison group.'' SBA determines differences in industry structure
between an industry under review and the industries in the two
comparison groups by comparing data on each of the industry factors,
including average firm size, average assets size, the four-firm
concentration ratio, and the Gini coefficient of distribution of firms
by size. Table 1, Average Characteristics of Receipts Based Comparison
Groups, (below) shows the average firm size (both simple and weighted),
average assets size, four-firm concentration ratio, average receipts of
the four largest firms, and the Gini coefficient for both anchor level
and higher level comparison groups for receipts based size standards.
Table 1--Average Characteristics of Receipts Based Comparison Groups
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average firm size ($ million) Average receipts
------------------------------------ Average assets Four-firm of four largest
Receipts based comparison group Weighted size ($ concentration firms ($ Gini coefficient
Simple average average million) ratio (%) million) *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Anchor Level................................ 1.32 19.63 0.84 16.6 196.4 0.693
Higher Level................................ 5.07 116.84 3.20 32.1 1,376.0 0.830
--------------------------------------------------------------------------------------------------------------------------------------------------------
* To be used for industries with a four-firm concentration ratio of 40% or greater.
Derivation of Size Standards Based on Industry Factors
For each industry factor in Table 1, SBA derives a separate size
standard based on the differences between the values for an industry
under review and the values for the two comparison groups. If the
industry value for a particular factor is near the corresponding factor
for the anchor comparison group, SBA will consider the $7 million
anchor size standard appropriate for that factor.
An industry factor significantly above or below the anchor
comparison group will generally imply a size standard for that industry
above or below the $7 million anchor. The new size standard in these
cases is 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 are $3.3
million, that can support a $19 million size standard. The $3.3 million
level is 52.8 percent between $1.32 million for the anchor comparison
group and $5.07 million for the higher level comparison group (($3.30
million - $1.32 million) / ($5.07 million - $1.32 million) = 0.528 or
52.8%). This proportional difference is applied to the difference
between the $7 million anchor size standard and average size standard
of $29 million for the higher level size standard group and then added
to $7 million to estimate a size standard of $18.61 million ([{$29.0
million - $7.0 million{time} * 0.528] + $7.0 million = $18.61
million). The final step is to round the estimated $18.61 million size
standard to the nearest fixed size standard, which in this example is
$19 million.
SBA applies the above calculation to derive a size standard for
each industry factor. Detailed formulas involved in these calculations
are presented in SBA's ``Size Standards Methodology,'' which is
available on its Web site at www.sba.gov/size. (However, it should be
noted that figures in the ``Size Standards Methodology'' White Paper
are based on 2002 Economic Census data and are different from those
presented in this proposed rule. That is because when SBA prepared its
``Size Standards Methodology,'' the 2007 Economic Census data were not
yet available). Table 2, Values of Industry Factors Supported Size
Standards, (below) shows ranges of values for each industry factor and
the levels of size standards supported by those values.
Table 2--Values of Industry Factors and Supported Size Standards
----------------------------------------------------------------------------------------------------------------
Or if average
Or if weighted Or if average receipts of Then implied
If simple average receipts average assets size ($ largest four Or if Gini size standard
size ($ million) receipts size million) firms ($ coefficient is ($
($ million) million) million)
----------------------------------------------------------------------------------------------------------------
<1.15....................... <15.22......... <0.73.......... <142.8......... <0.686......... 5.0
1.15 to 1.57................ 15.22 to 26.26. 0.73 to 1.00... 142.8 to 276.9. 0.686 to 0.702. 7.0
1.58 to 2.17................ 26.27 to 41.73. 1.01 to 1.37... 277.0 to 464.5. 0.703 to 0.724. 10.0
2.18 to 2.94................ 41.74 to 61.61. 1.38 to 1.86... 464.6 to 705.8. 0.725 to 0.752. 14.0
2.95 to 3.92................ 61.62 to 87.02. 1.87 to 2.48... 705.9 to 0.753 to 0.788. 19.0
1,014.1.
3.93 to 4.86................ 87.03 to 111.32 2.49 to 3.07... 1,014.2 to 0.789 to 0.822. 25.5
1,309.0.
[[Page 11007]]
4.87 to 5.71................ 111.33 to 3.08 to 3.61... 1,309.1 to 0.823 to 0.853. 30.0
133.41. 1,577.1.
>5.71....................... >133.41........ >3.61.......... >1,577.1....... >0.853......... 35.5
----------------------------------------------------------------------------------------------------------------
Derivation of Size Standard Based on Federal Contracting Factor
Besides industry structure, SBA also evaluates Federal contracting
data to assess how successful small businesses are in getting Federal
contracts under the existing size standards. For industries where the
small business share of total Federal contracting dollars is 10 to 30
percent lower than the small business share of total industry receipts,
SBA has designated a size standard one level higher than their current
size standard. For industries where the small business share of total
Federal contracting dollars is more than 30 percent lower than the
small business share of total industry receipts, SBA has designated a
size standard two levels higher than the current size standard.
Because of the complex relationships among several variables
affecting small business participation in the Federal marketplace, SBA
has chosen not to designate a size standard for the Federal contracting
factor alone that is more than two levels above the current size
standard. 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. This may
support a different size standard than indicated by this general rule
and take into consideration significant and unique aspects of small
business competitiveness in the Federal contract market. SBA welcomes
comments on its methodology for 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.
Of the 39 industries in NAICS Sector 62 reviewed in this proposed
rule, 13 industries averaged $100 million or more annually in Federal
contracting during fiscal years 2008 to 2010. In five of those 13
industries, the Federal contracting factor was significant (i.e., the
difference between the small business share of total industry receipts
and small business share of Federal contracting dollars was 10
percentage points or more), and a separate size standard was derived
for that factor for each of them.
New Size Standards Based on Industry and Federal Contracting Factors
Table 3, Size Standards Supported by Each Factor for Each Industry
(millions of dollars), shows the results of analyses of industry and
Federal contracting factors for each industry covered by this proposed
rule. Many of the NAICS industries in columns 2, 3, 4, 6, 7, and 8 show
two numbers. The upper number is the value for the industry or Federal
contracting factor shown on the top of the column, and the lower number
is the size standard supported by that factor. For the four-firm
concentration ratio, SBA estimates a size standard 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.
If the four-firm concentration ratio is more than 40 percent, SBA
indicates in column 6 the average size of the industry's top four firms
together with a size standard based on that average. Column 9 shows a
calculated new size standard for each industry. This is the average of
the size standards supported by each factor, rounded to the nearest
fixed size level. Analytical details involved in the averaging
procedure are described in SBA's ``Size Standard Methodology.'' For
comparison with the new standards, the current size standards are in
column 10 of Table 3.
[[Page 11008]]
Table 3--Size Standards Supported by Each Factor for Each Industry
[Millions of dollars]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Simple Weighted
average firm average firm Average Four-firm Four-firm Gini Federal Calculated Current size
NAICS code/ NAICS industry title size ($ size ($ assets size ($ ratio (%) average size coefficient contract size standard standard ($
million) million) million) ($ million) factor (%) ($ million) million)
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
621111--Offices of Physicians (except Mental $1.8 $31.1 $0.3 4.4 $3,660.3 0.697 -14.6 $10.0 $10.0
Health Specialists)............................
$10.0 $10.0 $5.0 .............. .............. $7.0 $14.0
621112--Offices of Physicians, Mental Health $0.4 $1.4 $0.1 2.5 $27.0 0.362 -8.0 $5.0 $10.0
Specialists....................................
$5.0 $5.0 $5.0 .............. .............. $5.0
621210--Offices of Dentists..................... $0.8 $3.9 $0.2 1.4 $330.4 0.343 -14.5 $7.0 $7.0
$5.0 $5.0 $5.0 .............. .............. $5.0 $10.0
621310--Offices of Chiropractors................ $0.3 $0.5 $0.1 0.6 $14.1 0.112 .............. $5.0 $7.0
$5.0 $5.0 $5.0 .............. .............. $5.0
621320--Offices of Optometrists................. $0.6 $1.4 $0.1 1.7 $42.9 0.317 .............. $5.0 $7.0
$5.0 $5.0 $5.0 .............. .............. $5.0
621330--Offices of Mental Health Practitioners $0.3 $1.8 $0.1 3.3 $43.0 0.468 .............. $5.0 $7.0
(except Physicians)............................
$5.0 $5.0 $5.0 .............. .............. $5.0
621340--Offices of Physical, Occupational and $0.8 $7.8 $0.2 12.3 $546.0 0.617 .............. $5.0 $7.0
Speech Therapists and Audiologists.............
$5.0 $5.0 $5.0 .............. .............. $5.0
621391--Offices of Podiatrists.................. $0.5 $1.0 $0.1 0.9 $8.5 0.261 .............. $5.0 $7.0
$5.0 $5.0 $5.0 .............. .............. $5.0
621399--Offices of All Other Miscellaneous $0.3 $1.2 $0.1 2.1 $17.6 0.352 -23.3 $7.0 $7.0
Health Practitioners...........................
$5.0 $5.0 $5.0 .............. .............. $5.0 $10.0
621410--Family Planning Centers................. $1.3 $7.2 $0.9 17.4 $78.3 0.722 .............. $7.0 $10.0
$7.0 $5.0 $7.0 .............. .............. $10.0
621420--Outpatient Mental Health and Substance $2.6 $7.8 $1.5 3.7 $111.1 0.651 -35.5 $14.0 $10.0
Abuse Centers..................................
$14.0 $5.0 $14.0 .............. .............. $5.0 $19.0
621491--HMO Medical Centers..................... $153.2 $370.2 $58.9 88.3 $1,184.0 .............. 0.1 $30.0 $10.0
$35.5 $35.5 $35.5 .............. $25.5
621492--Kidney Dialysis Centers................. $25.3 $244.4 $13.1 76.5 $2,365.3 0.860 .............. $35.5 $34.5
$35.5 $35.5 $35.5 .............. $35.5 $35.5
621493--Freestanding Ambulatory Surgical and $4.4 $14.1 $2.0 13.7 $526.8 0.648 .............. $14.0 $10.0
Emergency Centers..............................
$25.5 $5.0 $19.0 .............. .............. $5.0
621498--All Other Outpatient Care Centers....... $5.4 $28.0 $2.8 9.4 $637.7 0.763 .............. $19.0 $10.0
$30.0 $10.0 $25.5 .............. .............. $19.0
621511--Medical Laboratories.................... $8.2 $67.5 $3.9 45.3 $2,587.9 0.830 -6.9 $30.0 $13.5
$35.5 $19.0 $35.5 .............. $35.5 $30.0
621512--Diagnostic Imaging Centers.............. $3.4 $14.8 $1.7 7.4 $316.7 0.725 .............. $14.0 $13.5
$19.0 $5.0 $14.0 .............. .............. $14.0
621610--Home Health Care Services............... $2.9 $23.1 $0.9 7.4 $884.8 0.786 .............. $14.0 $13.5
$14.0 $7.0 $7.0 .............. .............. $19.0
621910--Ambulance Services...................... $3.2 $25.5 $1.4 23.6 $586.4 0.764 .............. $14.0 $7.0
$19.0 $7.0 $14.0 .............. .............. $19.0
621991--Blood and Organ Banks................... $24.4 $147.2 $17.4 34.6 $770.3 0.795 .............. $30.0 $10.0
$35.5 $35.5 $35.5 .............. .............. $25.5
621999--All Other Miscellaneous Ambulatory $2.8 $24.0 $1.3 20.4 $370.6 0.805 42.1 $14.0 $10.0
Health Care Services...........................
$14.0 $7.0 $10.0 .............. .............. $25.5
622110--General Medical and Surgical Hospitals.. $213.7 $472.3 $183.2 7.8 $12,744.3 .............. 51.8 $35.5 $34.5
$35.5 $35.5 $35.5
622210--Psychiatric and Substance Abuse $40.1 $58.3 $25.0 15.2 $653.2 .............. .............. $30.0 $34.5
Hospitals......................................
$35.5 $14.0 $35.5
622310--Specialty (except Psychiatric and $75.9 $123.8 $49.5 24.0 $1,708.4 .............. .............. $35.5 $34.5
Substance Abuse) Hospitals.....................
$35.5 $30.0 $35.5
[[Page 11009]]
623110--Nursing Care Facilities................. $10.7 $56.7 $7.7 10.6 $2,462.0 0.691 14.1 $25.5 $13.5
$35.5 $14.0 $35.5 .............. .............. $7.0
623210--Residential Mental Retardation $3.1 $18.7 $1.9 8.9 $407.6 0.717 .............. $14.0 $10.0
Facilities.....................................
$19.0 $7.0 $19.0 .............. .............. $10.0
623220--Residential Mental Health and Substance $2.5 $7.9 $1.7 6.8 $147.1 0.610 .............. $10.0 $7.0
Abuse Facilities...............................
$14.0 $5.0 $14.0 .............. .............. $5.0
623311--Continuing Care Retirement Communities.. $7.2 $31.7 $12.7 10.9 $709.9 0.720 .............. $25.5 $13.5
$35.5 $10.0 $35.5 .............. .............. $10.0
623312--Homes for the Elderly................... $1.3 $18.1 $1.7 18.6 $705.3 0.729 .............. $10.0 $7.0
$7.0 $7.0 $14.0 .............. .............. $14.0
623990--Other Residential Care Facilities....... $2.3 $7.9 $1.7 5.4 $113.4 0.663 -20.8 $10.0 $7.0
$14.0 $5.0 $14.0 .............. .............. $5.0 $10.0
624110--Child and Youth Services................ $1.6 $9.0 $1.2 .............. .............. 0.702 .............. $7.0 $7.0
$10.0 $5.0 $10.0 .............. .............. $7.0
624120--Services for the Elderly and Persons $1.6 $11.7 $1.0 3.6 $230.2 0.719 .............. $7.0 $7.0
with Disabilities..............................
$10.0 $5.0 $7.0 .............. .............. $10.0
624190--Other Individual and Family Services.... $1.3 $9.9 $0.9 .............. .............. 0.727 -9.9 $10.0 $7.0
$7.0 $5.0 $7.0 .............. .............. $14.0
624210--Community Food Services................. $1.8 $12.3 0.8 7.2 $93.7 0.753 .............. $10.0 $7.0
$10.0 $5.0 $7.0 .............. .............. $19.0
624221--Temporary Shelters...................... $1.2 $2.9 1.6 5.9 $55.4 0.487 .............. $10.0 $7.0
$7.0 $5.0 $14.0 .............. .............. $5.0
624229--Other Community Housing Services........ $1.8 $14.5 $3.6 21.1 $321.6 0.651 .............. $14.0 $7.0
$10.0 $5.0 $30.0 21.1 $321.6 $5.0
624230--Emergency and Other Relief Services..... $11.3 $265.3 .............. 43.0 $906.6 0.925 .............. $30.0 $7.0
$35.5 $35.5 .............. .............. $19.0 $35.5
624310--Vocational Rehabilitation Services...... $2.5 $9.3 $1.6 5.6 $160.5 0.644 .............. $10.0 $7.0
$14.0 $5.0 $14.0 .............. .............. $5.0
624410--Child Day Care Services................. $0.5 $9.9 0.2 11.4 $842.7 0.538 .............. $5.0 $7.0
$5.0 $5.0 $5.0 .............. .............. $5.0
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 11010]]
Common Size Standards
When many of the same businesses operate in multiple industries,
SBA believes that a common size standard can be appropriate for these
industries even if the industry and relevant program data suggest
different size standards. For instance, in past rules, SBA established
a common size standard for Computer Systems Design and Related Services
(NAICS 541511, NAICS 541112, NAICS 541513, NAICS 541519 (excluding the
``exception''), and NAICS 811212). Another example is the common size
standard for certain Architectural, Engineering (A&E) and Related
Services. These include NAICS 541310, NAICS 541330 (excluding the
``exceptions''), Map Drafting (an ``exception'' under NAICS 541340),
NAICS 541360, and NAICS 541370 (see 64 FR 28275 (May 25, 1999)). More
recently, SBA established a common size standard for some of the
industries in NAICS Sector 44-45, Retail Trade (see 75 FR 61597
(October 6, 2010)). Earlier this year, SBA proposed common size
standards for several industries in NAICS Sector 54, Professional,
Scientific and Technical Services (see 76 FR 14323 (March 16, 2011)),
NAICS Sector 48-49, Transportation and Warehousing (see 76 FR 27935
(May 13, 2011)), NAICS Sector 56, Administrative and Support, Waste
Management and Remediation Services (see 76 FR 63510 (October 12,
2011)), and NAICS Sector 53, Real Estate and Rental and Leasing (see 76
FR 70680 (November 15, 2011)).
For NAICS Sector 62, SBA derives, as an alternative to a separate
size standard for each industry, common size standards for industries
in four NAICS Industry Groups and one NAICS Subsector, as shown in
Table 4 Industry Groups for Common Size Standards. The SBA evaluated
industry and Federal contracting factors and derived a common size
standard for each Industry Group and Subsector using the same method as
described above. The results are in Table 5, Size Standards Supported
by Each Factor for Each Industry Group (millions of dollars) which
immediately follows Table 4, below.
Table 4--Industry Groups for Common Size Standards
----------------------------------------------------------------------------------------------------------------
Industries: 6-digit NAICS
Industry sector/group: NAICS codes Industry group title codes
----------------------------------------------------------------------------------------------------------------
6211 *...................................... Offices of Physicians............... 621111, 621112
6213 *...................................... Offices of Other Health 621310, 621320, 621330,
Practitioners. 621340, 621391, 621399
622......................................... Hospitals........................... 622110, 622210, 622310
6232........................................ Residential Mental Retardation, 623210, 623220
Mental Health and Substance Abuse
Facilities.
6241 *...................................... Individual and Family Services...... 624110, 624120, 624190
----------------------------------------------------------------------------------------------------------------
* Industries in these Industry Groups currently have the common size standards. SBA proposes to retain common
size standards for those industries and proposes a common size standard for two industries in NAICS Industry
Group 6232 that currently have separate size standards.
Table 5--Size Standards Supported by Each Factor for Each Industry Group
[Millions of dollars]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Simple Weighted
average firm average firm Average Four-firm Four-firm Gini Federal Calculated
NAICS code/industry title size ($ size ($ assets size ratio (%) average size coefficient contract size standard
million) million) ($ million) ($ million) factor (%) ($ million)
(1) (2) (3) (4) (5) (6) (7) (8) (9)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
6211--Offices of physicians..................................... $1.7 $30.5 $0.3 4.4 $3,663.3 0.697 -11.9 $10.0
$10.0 $10.0 $5.0 .............. .............. $7.0 $14.0
6213--Offices of other health practitioners..................... $0.4 $3.1 $0.1 4.3 $546.4 0.410 -16.3 $7.0
$5.0 $5.0 $5.0 .............. .............. $5.0 $10.0
622--Hospitals.................................................. $191.0 $460.6 $160.6 7.4 $12,984.0 .............. 50.2 $35.5
$35.5 $35.5 $35.5
6232--Residential mental retardation, mental health and $3.0 $15.2 $1.9 6.3 $425.5 0.701 .............. $14.0
substance abuse facilities.....................................
$19.0 $7.0 $19.0 .............. .............. $7.0
6241--Individual and Family Services............................ $1.5 $13.4 $1.0 3.1 $489.7 0.740 -11.9 $10.0
$7.0 $5.0 $7.0 .............. .............. $14.0 $10.0
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Evaluation of SBA Loan Data
Before deciding on an industry's size standard, SBA also considers
the impact of new or revised size standards on SBA's loan programs.
Accordingly, SBA examined its 7(a) and 504 Loan Program data for fiscal
years 2008 to 2010 to assess whether the proposed size standards need
further adjustments to ensure credit opportunities for small businesses
through those programs. For the industries reviewed in this rule, the
data show that it is mostly businesses much smaller than the current
size standards that utilize the SBA's 7(a) and 504 loans.
Furthermore, the Jobs Act established an alternative size standard
for SBA's 7(a) and 504 Program applicants. Specifically, an applicant
exceeding an NAICS industry based size standard may still be eligible
if its maximum tangible net worth does not exceed $15 million and its
average net income after Federal income taxes (excluding any carry-over
losses) for the 2 full fiscal years before the date of the application
is not more than $5 million.
Therefore, no size standard in NAICS 62, Health Care and Social
Assistance, needs an adjustment based on this factor.
[[Page 11011]]
Proposed Changes to Size Standards
Table 6, Summary of Size Standards Analysis, (below) summarizes the
results of SBA analyses of industry specific size standards from Table
3 and the results for common size standards from Table 5. In terms of
industry specific size standards, the results in Table 3 might support
increases in size standards for 25 industries, decreases for nine
industries and no changes for five industries. Based on common size
standards for certain NAICS Industry Groups and Subsectors, the results
in Table 5 appear to support increases in size standards for 28
industries, decreases for two industries, and no changes for nine
industries.
Table 6--Summary of Size Standards Analysis
----------------------------------------------------------------------------------------------------------------
Calculated
Current size industry Calculated
NAICS codes NAICS industry title standard ($ specific size common size
million) standard ($ standard ($
million) million)
----------------------------------------------------------------------------------------------------------------
621111.......................... Offices of Physicians $10.0 $10.0 $10.0
(except Mental Health
Specialists).
621112.......................... Offices of Physicians, 10.0 5.0 10.0
Mental Health
Specialists.
621210.......................... Offices of Dentists..... 7.0 7.0 ................
621310.......................... Offices of Chiropractors 7.0 5.0 7.0
621320.......................... Offices of Optometrists. 7.0 5.0 7.0
621330.......................... Offices of Mental Health 7.0 5.0 7.0
Practitioners (except
Physicians).
621340.......................... Offices of Physical, 7.0 5.0 7.0
Occupational and Speech
Therapists and
Audiologists.
621391.......................... Offices of Podiatrists.. 7.0 5.0 7.0
621399.......................... Offices of All Other 7.0 7.0 7.0
Miscellaneous Health
Practitioners.
621410.......................... Family Planning Centers. 10.0 7.0 ................
621420.......................... Outpatient Mental Health 10.0 14.0 ................
and Substance Abuse
Centers.
621491.......................... HMO Medical Centers..... 10.0 30.0 ................
621492.......................... Kidney Dialysis Centers. 34.5 35.5 ................
621493.......................... Freestanding Ambulatory 10.0 14.0 ................
Surgical and Emergency
Centers.
621498.......................... All Other Outpatient 10.0 19.0 ................
Care Centers.
621511.......................... Medical Laboratories.... 13.5 30.0 ................
621512.......................... Diagnostic Imaging 13.5 14.0 ................
Centers.
621610.......................... Home Health Care 13.5 14.0 ................
Services.
621910.......................... Ambulance Services...... 7.0 14.0 ................
621991.......................... Blood and Organ Banks... 10.0 30.0 ................
621999.......................... All Other Miscellaneous 10.0 14.0 ................
Ambulatory Health Care
Services.
622110.......................... General Medical and 34.5 35.5 35.5
Surgical Hospitals.
622210.......................... Psychiatric and 34.5 30.0 35.5
Substance Abuse
Hospitals.
622310.......................... Specialty (except 34.5 35.5 35.5
Psychiatric and
Substance Abuse)
Hospitals.
623110.......................... Nursing Care Facilities. 13.5 25.5 ................
623210.......................... Residential Mental 10.0 14.0 14.0
Retardation Facilities.
623220.......................... Residential Mental 7.0 10.0 14.0
Health and Substance
Abuse Facilities.
623311.......................... Continuing Care 13.5 25.5 ................
Retirement Communities.
623312.......................... Homes for the Elderly... 7.0 10.0 ................
623990.......................... Other Residential Care 7.0 10.0 ................
Facilities.
624110.......................... Child and Youth Services 7.0 7.0 10.0
624120.......................... Services for the Elderly 7.0 7.0 10.0
and Persons with
Disabilities.
624190.......................... Other Individual and 7.0 10.0 10.0
Family Services.
624210.......................... Community Food Services. 7.0 10.0 ................
624221.......................... Temporary Shelters...... 7.0 10.0 ................
624229.......................... Other Community Housing 7.0 14.0 ................
Services.
624230.......................... Emergency and Other 7.0 30.0 ................
Relief Services.
624310.......................... Vocational 7.0 10.0 ................
Rehabilitation Services.
624410.......................... Child Day Care Services. 7.0 5.0 ................
----------------------------------------------------------------------------------------------------------------
Despite the results depicted in Table 6, SBA believes that lowering
small business size standards is not in the best interest of small
businesses in the current economic environment. The U.S. economy was in
recession from December 2007 to June 2009, the longest and deepest of
any recessions since World War II. The economy lost more than eight
million non-farm jobs during 2008 to 2009. In response, Congress passed
and the President signed into law the American Recovery and
Reinvestment Act of 2009 (Recovery Act) to promote economic recovery
and to preserve and create jobs. Although the recession officially
ended in June 2009, the unemployment rate was 9.4 percent or higher
from May 2009 to December 2010. It has moderated somewhat to 8.6
percent in November 2011, but has been 9.0 percent or higher for eight
of the previous 10 months. The unemployment rate is forecast to remain
around this elevated level for a while. More recently, Congress passed
and the President signed the Jobs Act to promote small business job
creation. The Jobs Act puts more capital into the hands of
entrepreneurs and small business
[[Page 11012]]
owners; strengthens small businesses' ability to compete for contracts;
includes recommendations from the President's Task Force on Federal
Contracting Opportunities for Small Business; creates a more even
playing field for small businesses; promotes small business exporting,
building on the President's National Export Initiative; expands
training and counseling; and provides $12 billion in tax relief to help
small businesses invest in their firms and create jobs.
Lowering size standards can decrease the number of firms that
participate in Federal financial and procurement assistance programs
for small businesses. It can also affect small businesses that are now
exempt from or that receive some form of relief from the myriad other
Federal regulations that use SBA's size standards. That impact could
take the form of increased fees, paperwork, or other compliance
requirements for small businesses. Furthermore, size standards based
solely on analytical results without any other considerations can cut
off currently eligible small firms from those programs and benefits. In
NAICS Sector 62, more than 500 businesses would lose their small
business eligibility if size standards were lowered based solely on
results from industry specific analysis, and more than 240 small firms
would lose their eligibility if the size standards were lowered based
solely on common size standards analysis. That would run counter to
what SBA and the Federal Government are doing to help small businesses.
Reducing size eligibility for Federal procurement opportunities,
especially under current economic conditions, would not preserve or
create more jobs; rather, it would have the opposite effect. Therefore,
in this proposed rule, SBA does not intend to reduce size standards for
any industries. For industries where analyses might seem to support
lowering size standards, SBA proposes to retain the current size
standards. As stated previously, the Small Business Act requires the
Administrator to ``* * * consider other factors deemed to be relevant *
* *'' to establishing small business size standards. The current
economic conditions and the impact on job creation are quite relevant
to establishing small business size standards. SBA nevertheless invites
comments and suggestions on whether it should lower size standards as
suggested by analyses of industry and program data or retain the
current standards for those industries in view of current economic
conditions.
Based on comparisons between industry specific size standards and
common size standards within each Industry Group or Subsector, SBA
finds that for some industries, common size standards are more
appropriate for several reasons. First, analyzing industries at the
more aggregated Industry Group or Subsector level simplifies size
standards analysis and will produce more consistent results among
related industries. Second, in most cases, industries within each
Industry Group or Subsector currently have the same size standards and
SBA believes it is better to keep the revised size standards also the
same unless industries are significantly different. Third, within each
Industry Group or Subsector many of the same businesses tend to operate
in the same multiple industries. SBA believes that common size
standards reflect the Federal marketplace in those industries better
than do different size standards for each industry. Fourth, industry
specific size standards and common size standards are mostly within a
reasonably close range.
For industries where both industry specific size standards and
common size standards have been calculated, for the above reasons, SBA
proposes to apply common size standards. For industries where SBA has
not estimated common size standards, it proposes to apply industry
specific size standards. As discussed above, SBA has decided that
lowering small business size standards is inconsistent with what the
Federal Government is doing to stimulate the economy and encourage job
growth through the Recovery Act and the Jobs Act. Therefore, for those
industries for which its analyses suggested decreasing their size
standards, SBA proposes to retain the current size standards. Thus, of
the 39 industries in NAICS Sector 62, SBA proposes to increase size
standards for 28 industries and retain the current size standards for
11 industries. The industries for which SBA has proposed to increase
their size standards and their proposed size standards appear in Table
7, Summary of Proposed Size Standards Revisions (below).
SBA's decision to not lower size standards in NAICS Sector 62 is
consistent with SBA's prior actions for NAICS Sector 44-45 (Retail
Trade), NAICS Sector 72 (Accommodation and Food Services), and NAICS
Sector 81 (Other Services), which the Agency proposed (74 FR 53924, 74
FR 53913, and 74 FR 53941 (October 21, 2009)) and adopted in its final
rules (75 FR 61597, 75 FR 61604, and 75 FR 61591 (October 6, 2010)). It
is also consistent with the Agency's recently proposed rules for NAICS
Sector 54, Professional, Technical, and Scientific Services (76 FR
14323 (March 16, 2011)), NAICS Sector 48-49, Transportation and
Warehousing (76 FR 27935 (May 13, 2011)), NAICS Sector 51, Information
(76 FR 63216 (October 12, 2011)), and NAICS Sector 56, Administrative
and Support, Waste Management and Remediation Services (76 FR 63510
(October 12, 2011)), NAICS Sector 61, Educational Services (76 FR 70667
(November 15, 2011)), and NAICS Sector 53, Real Estate and Rental and
Leasing (76 FR 70680 (November 15, 2011)). In each of those final and
proposed rules, SBA opted not to reduce small business size standards,
for the same reasons it has provided above in this proposed rule.
Table 7--Summary of Proposed Size Standards Revisions
----------------------------------------------------------------------------------------------------------------
Current size Proposed size
NAICS codes NAICS industry title standard ($ standard ($
million) million)
------------------------------------------------------------------------------------------------
621420........................... Outpatient Mental Health $10.0 $14.0
and Substance Abuse
Centers.
621491........................... HMO Medical Centers...... 10.0 30.0
621492........................... Kidney Dialysis Centers.. 34.5 35.5
621493........................... Freestanding Ambulatory 10.0 14.0
Surgical and Emergency
Centers.
621498........................... All Other Outpatient Care 10.0 19.0
Centers.
621511........................... Medical Laboratories..... 13.5 30.0
621512........................... Diagnostic Imaging 13.5 14.0
Centers.
621610........................... Home Health Care Services 13.5 14.0
621910........................... Ambulance Services....... 7.0 14.0
621991........................... Blood and Organ Banks.... 10.0 30.0
621999........................... All Other Miscellaneous 10.0 14.0
Ambulatory Health Care
Services.
[[Page 11013]]
622110........................... General Medical and 34.5 35.5
Surgical Hospitals.
622210........................... Psychiatric and Substance 34.5 35.5
Abuse Hospitals.
622310........................... Specialty (except 34.5 35.5
Psychiatric and
Substance Abuse)
Hospitals.
623110........................... Nursing Care Facilities.. 13.5 25.5
623210........................... Residential Mental 10.0 14.0
Retardation Facilities.
623220........................... Residential Mental Health 7.0 14.0
and Substance Abuse
Facilities.
623311........................... Continuing Care 13.5 25.5
Retirement Communities.
623312........................... Homes for the Elderly.... 7.0 10.0
623990........................... Other Residential Care 7.0 10.0
Facilities.
624110........................... Child and Youth Services. 7.0 10.0
624120........................... Services for the Elderly 7.0 10.0
and Persons with
Disabilities.
624190........................... Other Individual and 7.0 10.0
Family Services.
624210........................... Community Food Services.. 7.0 10.0
624221........................... Temporary Shelters....... 7.0 10.0
624229........................... Other Community Housing 7.0 14.0
Services.
624230........................... Emergency and Other 7.0 30.0
Relief Services.
624310........................... Vocational Rehabilitation 7.0 10.0
Services.
----------------------------------------------------------------------------------------------------------------
Evaluation of Dominance in Field of Operation
SBA has determined that for the industries in NAICS Sector 62 for
which it has proposed to increase size standards, no individual firm at
or below the proposed size standard will be large enough to dominate
its field of operation. At the proposed individual size standards, if
adopted, small business shares of total industry receipts among those
industries vary from less than 0.01 percent to 0.6 percent, with an
average of 0.1 percent. These levels of market share effectively
preclude a firm at or below the proposed size standards from exerting
control on any of the industries.
Request for Comments
SBA invites public comments on this proposed rule, especially on
the following issues:
1. To simplify size standards, SBA proposes eight fixed levels for
receipts based size standards: $5 million, $7 million, $10 million, $14
million, $19 million, $25.5 million, $30 million, and $35.5 million.
SBA invites comments on whether simplification of size standards in
this way is necessary and if these proposed fixed size levels are
appropriate. SBA welcomes suggestions on alternative approaches to
simplifying small business size standards.
2. SBA seeks feedback on whether the proposed size standards for
NAICS Sector 62 are appropriate given the economic characteristics of
each industry reviewed in this proposed rule. SBA also seeks feedback
and suggestions on alternative standards, if they would be more
appropriate, including whether the number of employees is a more
suitable measure of size for certain industries and what that employee
level should be.
3. SBA proposes common size standards for industries within certain
NAICS Industry Groups, namely NAICS 6211, NAICS 6213, NAICS 6232, NAICS
6241, and NAICS 622. SBA invites comments or suggestions along with
supporting information with respect to the following:
a. Whether SBA should adopt common size standards for those
industries or establish a separate size standard for each industry,
b. Whether the proposed common size standards for those industries
are at the correct levels or what are more appropriate size standards
if the proposed standards are not suitable, and
c. Based on SBA's analysis of the industry data, too much variation
exists among the industries to retain the current common size standards
or propose different common size standards for several other industries
that currently have common size standards. SBA welcomes comments on
whether it should adopt common size standards for other industries in
NAICS Sector 62, and if so, how those industries are related so that a
common size standard would be appropriate.
4. SBA's proposed size standards are based on its evaluation of
five primary factors: average firm size, average assets size (as a
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
factors and/or suggestions of other factors that it should consider for
assessing industry characteristics when evaluating or revising size
standards. SBA also seeks information on relevant data sources, other
than those used by the Agency, if available.
5. SBA gives equal weight to each of the five primary factors in
all industries. SBA seeks feedback on whether it should continue giving
equal weight to each factor or whether it should give more weight to
one or more factors for certain industries. Recommendations to weigh
some factors more than others should include suggestions on the
specific weight for each factor for those industries along with
supporting information.
6. For some industries, based on its analysis of industry and
program data alone, SBA proposes to increase the existing size
standards by a large amount (such as NAICS 621511, NAICS 621991, NAICS
623110, and NAICS 624230), while for others the proposed increases are
modest. SBA seeks feedback on whether, as a policy, it should limit the
increase to a size standard or establish minimum or maximum values for
its size standards. SBA seeks suggestions on appropriate levels of
changes to size standards and on their minimum or maximum levels.
7. For analytical simplicity and efficiency, in this proposed rule,
SBA has refined its size standard methodology to obtain a single value
as a proposed size standard instead of a range of values, as in its
past size regulations. SBA welcomes any comments on this procedure and
suggestions on alternative methods.
Public comments on the above issues are very valuable to SBA for
validating its size standard methodology and proposed size standards
revisions in this proposed rule. This will help SBA to move forward
with its review of size
[[Page 11014]]
standards for other NAICS Sectors. Commenters addressing size standards
for a specific industry or a group of industries should include
relevant data and/or other information supporting their comments. If
comments relate to using size standards for Federal procurement
programs, SBA suggests that commenters provide information on the size
of contracts, the size of businesses that can undertake the contracts,
start-up costs, equipment and other asset requirements, the amount of
subcontracting, other direct and indirect costs associated with the
contracts, the use of mandatory sources of supply for products and
services, and the degree to which contractors can mark up those costs.
Compliance With Executive Orders 12866, 13563, 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. 801, et seq.
Regulatory Impact Analysis
1. Is there a need for the regulatory action?
SBA believes that the proposed size standards revisions for a
number of industries in NAICS Sector 62, Health Care and Social
Assistance, will better reflect the economic characteristics of small
businesses and the Federal Government marketplace. SBA's mission is to
aid and assist small businesses through a variety of financial,
procurement, business development, and advocacy programs. To assist 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 size definitions. The
Act also requires that small business size definitions vary to reflect
industry differences. The recently enacted Jobs Act also requires SBA
to review all size standards and make necessary adjustments to reflect
market conditions. 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 because of this rule is gaining eligibility for Federal small
business assistance programs. These include SBA's financial assistance
programs, economic injury disaster loans, and Federal procurement
programs intended for small businesses. Federal procurement programs
provide targeted 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
(WOSB), and service-disabled veteran-owned small business concerns
(SDVO SBC). Federal agencies may also use SBA size standards for a
variety of other regulatory and program purposes. These programs assist
small businesses to become more knowledgeable, stable, and competitive.
In the 28 industries in NAICS Sector 62 for which SBA has proposed
increasing size standards, SBA estimates that more than 4,100
additional firms will obtain small business status and become eligible
for these programs. That number is about 0.7 percent of the total
number of firms that are classified as small under the current
standards in all industries within NAICS Sector 62. If adopted as
proposed, this will increase the small business share of total industry
receipts in all industries within NAICS Sector 62 from about 30 percent
under the current size standards to nearly 32 percent.
Three groups will benefit from the proposed size standards
revisions in this rule, if they are adopted as proposed: (1) Some
businesses that are above the current size standards may gain small
business status under the higher size standards, thereby enabling them
to participate in Federal small business assistance programs; (2)
growing small businesses that are close to exceeding the current size
standards will be able to retain their small business status under the
higher size standards, thereby enabling them to continue their
participation in the programs; and (3) Federal agencies will have
larger pools of small businesses from which to draw for their small
business procurement programs.
During fiscal years 2008 to 2010, about 66 percent of Federal
contracting dollars spent in industries in NAICS Sector 62 were
accounted for by the 28 industries for which SBA has proposed to
increase size standards. SBA estimates that additional firms gaining
small business status in those industries under the proposed size
standards could potentially obtain Federal contracts totaling up to $25
million to $30 million annually under SBA's small business, 8(a), SDB,
HUBZone, WOSB, and SDVO SBC Programs, and other unrestricted
procurements. The added competition for many of these procurements can
also result in lower prices to the Government for procurements reserved
for small businesses, but SBA cannot quantify this benefit.
Under SBA's 7(a) Business Loan and 504 Programs, based on the 2008
to 2010 data, SBA estimates about 35 to 45 additional loans totaling
about $11 million to $15 million in Federal loan guarantees could be
made to these newly defined small businesses under the proposed
standards. Increasing the size standards will likely result in more
small business guaranteed loans to businesses in these industries, but
it would be impractical to try to estimate exactly the number and total
amount of loans. Under the Jobs Act, SBA can now guarantee
substantially larger loans than in the past. In addition, as described
above, the Jobs Act established an alternative size standard ($15
million in tangible net worth and $5 million in net income after income
taxes) for business concerns that do not meet the size standards for
their industry. Therefore, SBA finds it similarly difficult to quantify
the impact of these proposed standards on its 7(a) and 504 Loan
Programs.
Newly defined small businesses will also benefit from SBA's
Economic Injury Disaster Loan (EIDL) Program. Since this program is
contingent on the occurrence and severity of one or more disasters, SBA
cannot make a meaningful estimate of this impact.
To the extent that about 4,100 newly defined additional small firms
could become active in Federal procurement programs, the proposed
changes, if adopted, may entail some additional administrative costs to
the Federal Government associated with additional bidders for Federal
small business procurement opportunities. In addition, there will be
more firms seeking SBA's guaranteed loans, more firms eligible for
enrollment in the Central Contractor Registration's Dynamic Small
Business Search database, and more firms seeking certification as 8(a)
or HUBZone firms or qualifying for small business, WOSB, SDVO SBC, and
SDB status. Among those newly defined small businesses seeking SBA
assistance, there could be some additional costs associated with
[[Page 11015]]
compliance and verification of small business status and protests of
small business status. SBA believes that these added costs will be
minimal because mechanisms are already in place to handle these
administrative requirements.
Additionally, 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 small business set-aside
contracting might result in competition among fewer total bidders,
although there will be more small businesses eligible to submit offers.
In addition, higher costs may result when more full and open contracts
are awarded to HUBZone businesses that receive price evaluation
preferences. However, the additional costs associated with fewer
bidders are expected to be minor since, as by law, procurements may be
set aside for small businesses or reserved for the 8(a), HUBZone, WOSB,
or SDVO SBC Programs only if awards are expected to be made at fair and
reasonable prices (15 U.S.C. 637(a)(1)(D)(i)(I), 644(a), 657a(b)(2)(b),
and 657f(b)). The proposed size standards revisions, if adopted, may
have distributional effects among large and small businesses. Although
SBA cannot estimate with certainty the actual outcome of the gains and
losses among small and large businesses, it can identify several
probable impacts. There may 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. In addition, some Federal
contracts may be awarded to HUBZone concerns instead of large
businesses since these firms may be eligible for a price evaluation
preference for contracts when they compete on a full and open basis.
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. SBA
cannot estimate the potential distributional impacts of these transfers
with any degree of precision because FPDS-NG data only identify the
size of businesses receiving Federal contracts as ``small businesses''
or ``other than small businesses''; FPDS-NG does not provide the exact
size of the business.
The proposed revisions to the existing size standards for
Industries in NAICS Sector 62 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 13563
A description of the need for this regulatory action and benefits
and costs associated with this action including possible distributional
impacts that relate to Executive Order 13563 are included above in the
Regulatory Impact Analysis under Executive Order 12866.
In an effort to engage interested parties in this action, SBA has
presented its methodology (discussed above under Supplementary
Information) to various industry associations and trade groups. SBA
also met with various industry groups to get their feedback on its
methodology and other size standards issues. In addition, SBA presented
its size standards methodology to businesses in 13 cities in the U.S.
and sought their input as part of Jobs Act tours. The presentation also
included information on the latest status of the comprehensive size
standards review and on how interested parties can provide SBA with
input and feedback on size standards.
Additionally, SBA sent letters to the Directors of the Offices of
Small and Disadvantaged Business Utilization (OSDBU) at several Federal
agencies with considerable procurement responsibilities requesting
their feedback on how the agencies use SBA size standards and whether
current standards meet their programmatic needs (both procurement and
non-procurement). SBA gave appropriate consideration to all input,
suggestions, recommendations, and relevant information obtained from
industry groups, individual businesses, and Federal agencies in
preparing this proposed rule.
The review of size standards in NAICS Sector 62, Health Care and
Social Assistance, is consistent with Executive Order 13563, Section 6,
calling for retrospective analyses of existing rules. The last
comprehensive review of size standards occurred during the late 1970s
and early 1980s. Since then, except for periodic adjustments for
monetary based size standards, most reviews of size standards were
limited to a few specific industries in response to requests from the
public and Federal agencies. SBA recognizes that changes in industry
structure and the Federal marketplace over time have rendered existing
size standards for some industries no longer supportable by current
data. Accordingly, in 2007, SBA began a comprehensive review of its
size standards to ensure that existing size standards have supportable
bases and it will revise them when necessary. In addition, the Jobs Act
requires SBA to conduct a detailed review of all size standards and to
make appropriate adjustments to reflect market conditions.
Specifically, the Jobs Act requires SBA to conduct a detailed review of
at least one-third of all size standards during every 18-month period
from the date of its enactment and do a complete review of all size
standards not less frequently than once every 5 years thereafter.
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 the purposes of Executive Order 13132, SBA has determined that
this proposed rule will not have substantial, direct effects on the
States, on the relationship between the national government and the
States, or on the distribution of power and responsibilities among the
various levels of government. Therefore, SBA has determined that this
proposed rule has no federalism implications warranting preparation of
a federalism assessment.
Paperwork Reduction Act
For the purposes of the Paperwork Reduction Act, 44 U.S.C. Ch. 35,
SBA has determined that this rule will not impose any new reporting or
record keeping requirements.
[[Page 11016]]
Initial Regulatory Flexibility Analysis
Under the Regulatory Flexibility Act (RFA), this proposed rule, if
finalized, may have a significant impact on a substantial number of
small businesses in NAICS Sector 62, Health Care and Social Assistance.
As described above, this rule may affect small businesses seeking
Federal contracts, loans under SBA's 7(a), 504 Guaranteed Loan and
Economic Injury Disaster Loan Programs, and assistance under other
Federal small business programs.
Immediately below, SBA sets forth an initial regulatory flexibility
analysis (IRFA) of this proposed rule addressing the following
questions: (1) What are the need for and objective of the rule? (2)
What are SBA's description and estimate of the number of small
businesses to which the rule will apply? (3) What are the projected
reporting, record keeping, and other compliance requirements of the
rule? (4) What are the relevant Federal rules that may duplicate,
overlap, or conflict with the rule? and (5) What alternatives will
allow the Agency to accomplish its regulatory objectives while
minimizing the impact on small businesses?
1. What are the need for and objective of the rule?
Although size standards for three Subsectors of NAICS 62 (NAICS
Subsector 621, Ambulatory Health Care Services; NAICS Subsector 622,
Hospitals; and NAICS Subsector 623, Nursing and Residential Care
Facilities) were reviewed during 1999-2000, size standards for NAICS
Subsector 624, Social Assistance, which includes nine industries, have
not been reviewed since the early 1980s. Changes in industry structure,
technological changes, productivity growth, mergers and acquisitions,
and updated industry definitions may have changed the structure of many
industries within NAICS Sector 62. Such changes can be sufficient to
support revisions to current size standards for some industries. Based
on the analysis of the latest data available, SBA believes that the
revised standards in this proposed rule more appropriately reflect the
size of businesses in those industries that need Federal assistance.
The recently enacted Jobs Act also requires SBA to review all size
standards and make necessary adjustments to reflect market conditions.
2. What are SBA's description and estimate of the number of small
businesses to which the rule will apply?
If the proposed rule is adopted in its present form, SBA estimates
that more than 4,100 additional firms will become small because of
increases in size standards in 28 industries in NAICS Sector 62. That
represents 0.7 percent of total firms that are small under current size
standards in all industries within that Sector. This will result in an
increase in the small business share of total industry receipts for the
Sector from about 30 percent under the current size standard to nearly
32 percent under the proposed standards. The proposed standards, if
adopted, will enable more small businesses to retain their small
business status for a longer period. Many have lost their eligibility
and find it difficult to compete at current size standards with
companies that are significantly larger than they are. SBA believes the
competitive impact will be positive for existing small businesses and
for those that exceed the size standards but are on the very low end of
those that are not small. They might otherwise be called or referred to
as mid-sized businesses, although SBA only defines what is small; other
entities are other than small.
3. What are the projected reporting, recordkeeping and other compliance
requirements of the rule?
The proposed size standards changes do not impose any additional
reporting or recordkeeping requirements on small businesses. However,
qualifying for Federal procurement and a number of other programs
requires that businesses register in the CCR database and certify at
least once annually that they are small in the Online Representations
and Certifications Application (ORCA). Therefore, businesses opting to
participate in those programs must comply with CCR and ORCA
requirements. There are no costs associated with either CCR
registration or ORCA certification. Changing 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.
4. What are the relevant Federal rules which may duplicate, overlap, or
conflict with the rule?
Under Sec. 3(a)(2)(C) of the Small Business Act, 15 U.S.C.
632(a)(2)(c), Federal agencies must use SBA's size standards to define
a small business, unless specifically authorized by statute to do
otherwise. In 1995, SBA published in the Federal Register a list of
statutory and regulatory size standards that identified the application
of SBA's size standards as well as other size standards used by Federal
agencies (60 FR 57988 (November 24, 1995)). SBA is not aware of any
Federal rule that would duplicate or conflict with establishing size
standards.
However, the Small Business Act and SBA's regulations allow Federal
agencies to develop different size standards if they believe that SBA's
size standards are not appropriate for their programs, with the
approval of SBA's Administrator (13 CFR 121.903). The Regulatory
Flexibility Act authorizes an Agency to establish an alternative small
business definition, after consultation with the Office of Advocacy of
the U.S. Small Business Administration (5 U.S.C. 601(3)).
5. What alternatives will allow the Agency to accomplish its regulatory
objectives while minimizing the impact on small entities?
By law, SBA is required to develop numerical size standards for
establishing eligibility for Federal small business assistance
programs. Other than varying size standards by industry and changing
the size measures, no practical alternative exists to the systems of
numerical size standards.
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
part 13 CFR part 121 as follows:
PART 121--SMALL BUSINESS SIZE REGULATIONS
1. The authority citation for part 121 is revised to read as
follows:
Authority: 15 U.S.C. 632, 634(b)(6), 636(b), 662, and 694a(9).
2. In Sec. 121.201, in the table, revise the entries for
``621420'', ``621491'', ``621492'', ``621493'', ``621498'', ``621511'',
``621512'', ``621610'', ``621910'', ``621991'', ``621999'', ``622110'',
``622210'', ``622310'', ``623110'', ``623210'', ``623220'', ``623311'',
``623312'', ``623990'', ``624110'', ``624120'', ``624190'', ``624210'',
``624221'', ``624229'', ``624230'', and ``624310'' to read as follows:
Sec. 121.201 What size standards has SBA identified by North American
Industry Classification System codes?
* * * * *
[[Page 11017]]
Small Business Size Standards by NAICS Industry
----------------------------------------------------------------------------------------------------------------
Size standards in Size standards in
NAICS codes NAICS U.S. industry title millions of number of
dollars employees
----------------------------------------------------------------------------------------------------------------
* * * * * * *
621420................................. Outpatient Mental Health and $14.0 ..................
Substance Abuse Centers.
621491................................. HMO Medical Centers............ 30.0 ..................
621492................................. Kidney Dialysis Centers........ 35.5 ..................
621493................................. Freestanding Ambulatory 14.0 ..................
Surgical and Emergency Centers.
621498................................. All Other Outpatient Care 19.0 ..................
Centers.
621511................................. Medical Laboratories........... 30.0 ..................
621512................................. Diagnostic Imaging Centers..... 14.0 ..................
621610................................. Home Health Care Services...... 14.0 ..................
621910................................. Ambulance Services............. 14.0 ..................
621991................................. Blood and Organ Banks.......... 30.0 ..................
621999................................. All Other Miscellaneous 14.0 ..................
Ambulatory Health Care
Services.
----------------------------------------------------------------------------------------------------------------
Subsector 622--Hospitals
----------------------------------------------------------------------------------------------------------------
* * * * * * *
622110................................. General Medical and Surgical 35.5 ..................
Hospitals.
622210................................. Psychiatric and Substance Abuse 35.5 ..................
Hospitals.
622310................................. Specialty (except Psychiatric 35.5 ..................
and Substance Abuse) Hospitals.
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Subsector 623--Nursing and Residential Care Facilities
----------------------------------------------------------------------------------------------------------------
623110................................. Nursing Care Facilities........ 25.5 ..................
623210................................. Residential Mental Retardation 14.0 ..................
Facilities.
623220................................. Residential Mental Health and 14.0 ..................
Substance Abuse Facilities.
623311................................. Continuing Care Retirement 25.5 ..................
Communities.
623312................................. Homes for the Elderly.......... 10.0 ..................
623990................................. Other Residential Care 10.0 ..................
Facilities.
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Subsector 624--Social Assistance
----------------------------------------------------------------------------------------------------------------
* * * * * * *
624110................................. Child and Youth Services....... 10.0 ..................
624120................................. Services for the Elderly and 10.0 ..................
Persons with Disabilities.
624190................................. Other Individual and Family 10.0 ..................
Services.
624210................................. Community Food Services........ 10.0 ..................
624221................................. Temporary Shelters............. 10.0 ..................
624229................................. Other Community Housing 14.0 ..................
Services.
624230................................. Emergency and Other Relief 30.0 ..................
Services.
624310................................. Vocational Rehabilitation 10.0 ..................
Services.
* * * * * * *
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Dated: December 21, 2011.
Karen G. Mills,
Administrator.
[FR Doc. 2012-4329 Filed 2-23-12; 8:45 am]
BILLING CODE 8025-01-P
