Small Business Size Standards: Arts, Entertainment, and Recreation, 37417-37422 [2013-14708]
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Federal Register / Vol. 78, No. 119 / Thursday, June 20, 2013 / Rules and Regulations
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Dated: June 13, 2013.
Karen G. Mills,
Administrator.
[FR Doc. 2013–14710 Filed 6–19–13; 8:45 am]
BILLING CODE 8025–01–P
SMALL BUSINESS ADMINISTRATION
13 CFR Part 121
RIN 3245–AG36
Small Business Size Standards: Arts,
Entertainment, and Recreation
U.S. Small Business
Administration.
ACTION: Final rule.
AGENCY:
The United States Small
Business Administration (SBA) is
increasing the small business size
standards for 17 industries in North
American Industry Classification
System (NAICS) Sector 71, Arts,
Entertainment, and Recreation, and
retaining the current size standards for
the remaining eight industries in that
Sector. As part of its ongoing
comprehensive size standards review,
SBA evaluated all size standards for
industries in NAICS Sector 71 to
determine whether they should be
retained or revised.
DATES: This rule is effective July 22,
2013.
SUMMARY:
Jon
Haitsuka, Program Analyst, Size
Standards Division, (202) 205–6618 or
sizestandards@sba.gov.
FOR FURTHER INFORMATION CONTACT:
To
determine eligibility for Federal small
business assistance programs, SBA
establishes small business size
definitions (referred to as size
standards) for private sector industries
in the United States. The SBA’s existing
size standards use two primary
measures of business size—average
annual receipts and number of
employees. Financial assets, electric
output and refining capacity are used as
size measures for a few specialized
industries. In addition, SBA’s Small
Business Investment Company (SBIC),
7(a), and Certified Development
Company (CDC or 504) Loan Programs
determine small business eligibility
using either the industry based size
standards or alternative net worth and
net income size based standards. At the
start of the current comprehensive
review of SBA’s small business size
standards, there were 41 different size
standards levels, covering 1,141 NAICS
industries and 18 sub-industry activities
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(i.e., ‘‘exceptions’’ in SBA’s table of size
standards). Of these, 31 were based on
average annual receipts, seven based on
number of employees, and three based
on other measures. Presently, there are
a total of 1,031size standards, 516 of
which are based on average annual
receipts, 499 on number of employees,
10 on megawatt hours, and six on
average assets.
Over the years, SBA has received
comments that its size standards have
not kept up with changes in the
economy, and in particular, that they do
not reflect changes in the Federal
contracting marketplace and industry
structure. The last comprehensive
review of 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 makes
periodic inflation adjustments to its
monetary based size standards. The
latest inflation adjustment to size
standards was published in the Federal
Register on July 18, 2008 (73 FR 41237).
SBA recognizes that changes in
industry structure and the Federal
marketplace since the last overall
review 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 determine whether existing
size standards have supportable bases
relative to the current data, and to revise
them, where 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. 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 to
review all size standards not less
frequently than once every 5 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.
SBA has chosen not to review all size
standards at one time. Rather, it is
reviewing groups of related industries
on a Sector by Sector basis.
As part of SBA’s comprehensive
review of size standards, the Agency
reviewed all size standards in NAICS
Sector 71, Arts, Entertainment, and
Recreation, to determine whether the
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37417
existing size standards should be
retained or revised. After its review,
SBA published a proposed rule for
public comment in the July 18, 2012
issue of the Federal Register (77 FR
42211) on its proposal to increase the
size standards for 17 industries in
NAICS Sector 71. The rule was one of
a series of proposed rules that examines
industries grouped by NAICS Sector.
In conjunction with current
comprehensive size standards review,
SBA developed a ‘‘Size Standards
Methodology’’ for developing,
reviewing, and modifying size
standards, when necessary. SBA
published the document on its Web site
at www.sba.gov/size for public review
and comments, and also included it as
a supporting document in the electronic
docket of the proposed rule on NAICS
Sector 71 at www.regulations.gov.
In evaluating an industry’s size
standard, SBA examines its
characteristics (such as average firm
size, startup costs, industry competition
and distribution of firms by size) and
the level and small business share of
Federal contract dollars in that industry.
SBA also examines the potential impact
a size standard revision might have on
its financial assistance programs, and
whether a business concern under a
revised size standard would be
dominant in its industry. For the
proposed rule, SBA analyzed the
characteristics of each industry in
NAICS Sector 71, mostly using a special
tabulation obtained from the U.S.
Bureau of the Census from its 2007
Economic Census (the latest available).
SBA also evaluated the level and small
business share of Federal contracts in
each of those industries using the data
from the Federal Procurement Data
System—Next Generation (FPDS–NG)
for fiscal years 2008–2010. To evaluate
the impact of changes to size standards
on its loan programs, SBA evaluated
internal data on its guaranteed loan
programs for fiscal years 2008–2010.
SBA’s ‘‘Size Standards Methodology’’
provides a detailed description of its
analyses of various industry and
program factors and data sources, and
how the Agency uses the results to
establish and revise size standards. In
the proposed rule itself, SBA detailed
how it applied its ‘‘Size Standards
Methodology’’ to review and modify,
where necessary, the existing size
standards for industries in NAICS
Sector 71. SBA sought comments from
the public on a number of issues about
its ‘‘Size Standards Methodology,’’ such
as whether there are alternative
methodologies that SBA should
consider; whether there are alternative
or additional factors or data sources that
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SBA should evaluate; whether SBA’s
approach to establishing small business
size standards makes sense in the
current economic environment; whether
SBA’s application of anchor size
standards is appropriate in the current
economy; whether there are gaps in
SBA’s methodology because of the lack
of comprehensive data; and whether
there are other facts or issues that SBA
should consider.
SBA sought comments on its proposal
to increase size standards for 17
industries and retain the existing size
standards for the remaining eight
industries in NAICS Sector 71.
Specifically, SBA requested comments
on whether the size standards should be
revised as proposed and whether the
proposed revisions are appropriate. SBA
also invited comments on whether its
proposed eight fixed levels for receipts
based size standard are appropriate and
whether it should adopt common size
standards for some industries in NAICS
Sector 71.
The SBA’s analyses supported
keeping the current size standards for
three industries and lowering them for
five industries in NAICS Sector 71.
However, as SBA pointed out in the
proposed rule, lowering size standards
will reduce the number of firms eligible
to participate in Federal small business
assistance programs and this is counter
to what the Federal government and
SBA are doing to help small businesses.
Therefore, SBA proposed to retain the
current size standards for those five
industries and requested comments on
whether the Agency should lower size
standards for which its analyses might
support lowering them.
Summary of Comments
SBA received only one comment to
the proposed rule. However, the
commenter did not offer any comments
or suggestions regarding the proposed
revisions to size standards in NAICS
Sector 71. Thus, SBA is not making any
adjustment to proposed size standards
based on this comment.
The comment to the proposed rule is
available for public review at https://
www.regulations.gov, using RIN–3245–
AG36.
Conclusion
Based on the analyses of relevant
industry and program data and
evaluation of public comments it
received on the proposed rule, SBA has
decided to increase the small business
size standards for 17 industries in
NAICS Sector 71 to the levels it
proposed. Those industries and their
revised size standards are shown in
Table 1, Summary of Revised Size
Standards in NAICS Sector 71, below.
TABLE 1—SUMMARY OF REVISED SIZE STANDARDS IN NAICS SECTOR 71
NAICS Industry
code
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711110
711120
711130
711190
711211
711212
711219
711310
711320
711410
712110
712130
713110
713210
713290
713910
713920
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
Theater Companies and Dinner Theaters .......................................................................
Dance Companies ...........................................................................................................
Musical Groups and Artists .............................................................................................
Other Performing Arts Companies ..................................................................................
Sports Teams and Clubs .................................................................................................
Race Tracks .....................................................................................................................
Other Spectator Sports ....................................................................................................
Promoters of Performing Arts, Sports and Similar Events with Facilities .......................
Promoters of Performing Arts, Sports and Similar Events without Facilities ..................
Agents and Managers for Artists, Athletes, Entertainers and Other Public Figures ......
Museums .........................................................................................................................
Zoos and Botanical Gardens ...........................................................................................
Amusement and Theme Parks ........................................................................................
Casinos (except Casino Hotels) ......................................................................................
Other Gambling Industries ...............................................................................................
Golf Courses and Country Clubs ....................................................................................
Skiing Facilities ................................................................................................................
For the reasons as stated above in this
final rule and in the proposed rule, SBA
has decided to retain the current
receipts based size standards for the five
industries for which analytical results
suggested lowering them. The five
industries are the following: NAICS
711510, Independent Artists, Writers,
and Performers; NAICS 712120,
Historical Sites; NAICS 712190, Nature
Parks and Other Similar Institutions;
NAICS 713120, Amusement Arcades;
and NAICS 713990, All Other
Amusement and Recreation Industries.
Not lowering size standards for these
industries in NAICS Sector 71 is
consistent with SBA’s recent final rules
on NAICS Sector 44–45, Retail Trade
(75 FR 61597 (October 6, 2010)), NAICS
Sector 72, Accommodation and Food
Services (75 FR 61604 (October 6,
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standard
($ million)
NAICS Industry title
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2010)), NAICS Sector 81, Other Services
(75 FR 61591 (October 6, 2010)), NAICS
Sector 54, Professional, Scientific and
Technical Services (77 FR 7490
(February 10, 2012)), NAICS Sector 48–
49, Transportation and Warehousing (77
FR 10943 (February 24, 2012)), NAICS
Sector 53, Real Estate and Rental and
Leasing (77 FR 58747 (September 24,
2012)), NAICS Sector 61, Educational
Services (77 FR 58739 (September 24,
2012)), NAICS Sector 62, Health Care
and Social Assistance (77 FR 58755
(September 24, 2012)), NAICS Sector 51,
Information (77 FR 72702 (December 6,
2012)), and NAICS Sector 56,
Administrative and Support, Waste
Management and Remediation Services
(77 FR 72691 (December 6, 2012)). In
each of those final rules, SBA adopted
its proposal not to reduce small
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$7.0
$7.0
$7.0
$7.0
$7.0
$7.0
$7.0
$7.0
$7.0
$7.0
$7.0
$7.0
$7.0
$7.0
$7.0
$7.0
$7.0
Revised size
standard
($ million)
$19.0
$10.0
$10.0
$25.5
$35.5
$35.5
$10.0
$30.0
$14.0
$10.0
$25.5
$25.5
$35.5
$25.5
$30.0
$14.0
$25.5
business size standards for the same
reasons. SBA is also retaining the
existing size standards for three
industries for which the results
supported them at their current levels.
The three industries are the following:
NAICS 713930, Marinas; NAICS 713940,
Fitness and Recreational Sports Centers;
and NAICS 713950, Bowling Centers.
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 final
rule is not a ‘‘significant regulatory
action’’ for purposes of Executive Order
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12866. In order to help explain the need
of this rule and the rule’s potential
benefits and costs, SBA is providing
below a Cost Benefit Analysis in of this
rule. This is also not a ‘‘major rule’’
under the Congressional Review Act, 5
U.S.C. 800.
Cost Benefit Analysis
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1. Is there a need for the regulatory
action?
SBA believes that the revised changes
to small business size standards for 17
industries in NAICS Sector 71, Arts,
Entertainment, and Recreation, reflect
changes in economic characteristics of
small businesses and the Federal
procurement market conditions in those
industries. SBA’s mission is to aid and
assist small businesses through a variety
of financial, procurement, business
development, and advocacy programs.
To assist the intended beneficiaries of
these programs effectively, SBA
establishes distinct definitions to
determine which businesses are deemed
small businesses. The Small Business
Act (15 U.S.C. 632(a)) delegated to the
SBA’s Administrator the responsibility
for establishing definitions for small
business. The Act also requires that
small business definitions vary to reflect
industry differences. The Jobs Act
requires the Administrator to review at
least one-third of all size standards
within each 18-month period from the
date of its enactment, and review all
size standards at least every five years
thereafter. The supplementary
information section of the July 18, 2012
proposed rule and this final rule
explained the SBA’s methodology for
analyzing a size standard for a particular
industry.
2. What are the potential benefits and
costs of this regulatory action?
The most significant benefit to
businesses obtaining small business
status as a result of this final rule is
gaining eligibility for Federal small
business assistance programs, including
SBA’s financial assistance programs,
economic injury disaster loans, and
Federal procurement opportunities
intended for small businesses. Federal
small business programs provide
targeted opportunities for small
businesses under SBA’s various
business development and contracting
programs. These include the 8(a), small
disadvantaged businesses (SDB), small
businesses located in Historically
Underutilized Business Zones
(HUBZone), women owned small
businesses (WOSB), economically
disadvantaged women-owned small
businesses (EDWOSB), and the service
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disabled veteran owned small business
(SDVOSB) Programs. Other Federal
agencies also may use SBA’s size
standards for a variety of regulatory and
program purposes. These programs help
small businesses become more
knowledgeable, stable, and competitive.
In the 17 industries in NAICS Sector 71
for which SBA has decided to increase
size standards, SBA estimates that about
1,450 additional firms will gain small
business status and become eligible for
these programs. That number is 1.3
percent of total firms that are classified
as small under the current size
standards in all 25 industries in NAICS
Sector 71. SBA estimates that this will
increase the small business share of
total industry receipts in that Sector
from 35 percent under the current size
standards to 43 percent under the
revised size standards.
The benefits of increasing size
standards to a more appropriate level
will accrue to three groups: (1) Some
businesses that are above the current
size standards will 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 a larger pool of small businesses
from which to draw for their small
business procurement programs.
Based on the data for fiscal years
2008–2010, more than 45 percent of
total Federal contracting dollars spent in
all industries in NAICS Sector 71 were
accounted for by the 17 industries for
which SBA is increasing size standards.
SBA estimates that additional firms
gaining small business status in those
industries under the revised size
standards could potentially obtain
Federal contracts totaling up to $5
million per year under the small
business, 8(a), SDB, HUBZone, WOSB,
EDWOSB and SDVOSB Programs and
other unrestricted procurements. The
added competition for many of these
procurements may also result in lower
prices to the Government for
procurements reserved for small
businesses, although SBA cannot
quantify this benefit.
Under SBA’s 7(a) and 504 Loan
Programs, based on the data for fiscal
years 2008–2010, SBA estimates that
approximately 15 to 20 additional loans
totaling $4 million to $6 million in new
Federal loan guarantees could be made
to the newly defined small businesses
under the revised size standards. Under
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the Jobs Act, SBA can now guarantee
substantially larger loans than in the
past. In addition, the Jobs Act
established an alternative size standard
for SBA’s 7(a) and 504 Loan Programs
for those applicants that do not meet the
size standards for their industries. That
is, under the Jobs Act, if a firm applies
for a 7(a) or 504 loan but does not meet
the size standard for its industry, it
might still qualify if, including its
affiliates, it has tangible net worth that
does not exceed $15 million and also
has average net income after Federal
income taxes (excluding any carry-over
losses) for its preceding two completed
fiscal years that do not exceed $5
million. Thus, SBA finds it difficult to
quantify the actual impact of the revised
size standards on its 7(a) and 504 Loan
Programs.
Newly defined small businesses will
also benefit from SBA’s Economic Injury
Disaster Loan Program. Since this
program is contingent on the occurrence
and severity of a disaster, SBA cannot
make a meaningful estimate of this
impact.
To the extent that all 1,450 newly
defined small firms under the revised
size standards in NAICS Sector 71 could
become active in Federal procurement
programs, the revisions to size standards
may entail some additional
administrative costs to the Federal
Government associated with there being
more bidders for Federal small business
procurement opportunities. In addition,
there will be more firms seeking SBA
guaranteed loans, more firms eligible for
enrollment in the System for Award
Management (SAM) and Dynamic Small
Business Search database, and more
firms seeking certification as 8(a) or
HUBZone firms or more firms qualifying
for small business, WOSB, EDWOSB,
SDVOSB and SDB status. Among these
newly defined small businesses seeking
SBA’s assistance, there could be some
additional costs associated with
compliance and verification of small
business status and protests of small
business status. SBA believes that these
added administrative costs will be
minimal because mechanisms are
already in place to handle these
requirements.
Additionally, costs to the Federal
Government may be higher on some
Federal contracts under the higher
revised size standards. With a greater
number of businesses defined as small,
Federal agencies may choose to set aside
more contracts for competition among
small businesses rather than using full
and open competition. The movement
from unrestricted to set-aside
contracting might result in competition
among fewer total bidders, although
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there will be more small businesses
eligible to submit offers. In addition,
higher costs may result when additional
full and open contracts are awarded to
HUBZone businesses because of price
evaluation preference. However, these
additional costs associated with fewer
bidders are expected to be minor since,
by law, procurements may be set aside
for small businesses or reserved for the
small business, 8(a), HUBZone, WOSB,
EDWOSB or SDVOSB Programs only if
awards are expected to be made at fair
and reasonable prices.
The revised size standards may have
some distributional effects among large
and small businesses. Although SBA
cannot estimate with certainty the
actual outcome of gains and losses
among small and large businesses, it can
identify several probable impacts. There
may be a transfer of some Federal
contracts from large businesses to small
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 agencies
may award more Federal contracts to
HUBZone concerns instead of large
businesses since HUBZone concerns
may be eligible for price evaluation
adjustments when they compete on full
and open bidding opportunities.
Similarly, currently defined small
businesses may obtain fewer Federal
contracts due to the increased
competition from more businesses
defined as small under the revised size
standards. This transfer may be offset by
more 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 small businesses
under the existing size standards. The
SBA cannot estimate with precision the
potential distributional impacts of these
transfers.
The revisions to the existing size
standards in NAICS Sector 71, Arts,
Entertainment, and Recreation, 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.
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Executive Order 13563
A description of the need for this
regulatory action and benefits and costs
associated with this action, including
possible distributions impacts that
relate to Executive Order 13563 is
included above in the Cost Benefit
Analysis under Executive Order 12866.
In an effort to engage interested
parties in this regulatory action, SBA
presented its methodology (discussed
under Supplementary Information in
the proposed rule and this rule) to
various industry associations and trade
groups. SBA also met with various
industry groups to obtain their feedback
on its methodology and other size
standards issues. In addition, SBA also
presented its size standards
methodology to businesses in 13 cities
in the U.S. and sought their input as
part of the Jobs Act tours. The
presentations also included information
on the latest status of the
comprehensive size standards review
and how interested parties can provide
SBA with input and feedback on the
size standards review. Moreover, SBA
presented the same information to
Department of Defense (DoD)
contracting personnel at their annual
training session. It included updates on
what size standards rules SBA was
currently reviewing and plans to review
in the future. This is important because
DoD contracting provides the greatest
opportunities for and awards to small
businesses.
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’s
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 the July
18, 2012 proposed rule (77 FR 42211)
for NAICS Sector 71.
Furthermore, when SBA issued the
proposed rule, it notified individuals,
government procurement, and
companies that had in recent years
exhibited an interest by letter, email, or
phone, in size standards for NAICS
Sector 71 so they could comment.
The review of size standards in
NAICS Sector 71, Arts, Entertainment,
and Recreation, is consistent with
Section 6 of Executive Order 13563
calling for retrospective analyses of
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existing rules. The last overall 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 all
size standards to ensure that existing
size standards have supportable bases
and to revise them when necessary. In
addition, the Jobs Act directs 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 purposes of Executive Order
13132, SBA has determined that this
final rule will not have substantial,
direct effects on the States, on the
relationship between the national
government and the States, or on the
distribution of power and
responsibilities among the various
levels of government. Therefore, SBA
has determined that this final rule has
no Federalism implications warranting
preparation of a Federalism assessment.
Paperwork Reduction Act
For the purpose of the Paperwork
Reduction Act, 44 U.S.C. Ch. 35, SBA
has determined that this final rule
would not impose any new reporting or
record keeping requirements.
Final Regulatory Flexibility Analysis
Under the Regulatory Flexibility Act
(RFA), this final rule may have a
significant impact on a substantial
number of small entities in NAICS
Sector 71, Arts, Entertainment, and
Recreation. As described above, this
rule may affect small entities seeking
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Federal contracts, SBA’s 7(a) and 504
Guaranteed Loans, SBA’s Economic
Injury Disaster Loans, and various small
business benefits under other Federal
programs.
Immediately below, SBA sets forth a
final regulatory flexibility analysis of
this final 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 entities 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
which may duplicate, overlap or
conflict with the rule? and (5) What
alternatives will allow the Agency to
accomplish its regulatory objectives
while minimizing the impact on small
entities?
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1. What are the need for and objective
of the rule?
Most of SBA’s size standards for the
Arts, Entertainment, and Recreation
industries had not been reviewed since
the 1980s. Technological changes,
productivity growth, international
competition, mergers and acquisitions
and updated industry definitions may
have changed the structure of many
industries in that Sector. Such changes
can be sufficient to support revisions to
size standards for some industries.
Based on the analysis of the latest
industry and program data available,
SBA believes that the revised standards
in this rule more appropriately reflect
the size of businesses in those industries
that need Federal assistance.
Additionally, the Jobs Act requires SBA
to review all size standards and make
appropriate adjustments to reflect
current data and market conditions.
2. What are SBA’s description and
estimate of the number of small entities
to which the rule will apply?
SBA estimates that approximately
1,450 additional firms will become
small because of increases in size
standards in 17 industries in NAICS
Sector 71. That represents 1.3 percent of
total firms that are classified as small
under the current size standards in all
25 industries in that Sector. This will
result in an increase in the small
business share of total industry receipts
in those industries from about 35
percent under the current size standards
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to nearly 43 percent under the revised
size standards. SBA does not anticipate
a significant competitive impact on
smaller businesses in these industries
because of this rule. The revised size
standards will enable more small
businesses to retain their small business
status for a longer period. Under current
size standards, many small businesses
may have lost their eligibility or found
it difficult to compete with companies
that are significantly larger than they are
and this final rule attempts to correct
that impact. SBA believes these changes
will have a positive impact for existing
small businesses and for those that have
either exceeded or are about to exceed
current size standards.
3. What are the projected reporting,
record keeping, and other compliance
requirements of the rule and an estimate
of the classes of small entities which
will be subject to the requirements?
Revising size standards does not
impose any additional reporting or
record keeping requirements on small
entities. However, qualifying for Federal
procurement and a number of other
Federal programs requires that entities
register in the System for Award
Management (SAM). Therefore,
businesses opting to participate in those
programs must comply with SAM
requirements. There are no costs
associated with SAM registration.
Revising size standards alters access to
SBA’s and other Federal programs that
are designed to assist small businesses,
but does not impose a regulatory burden
because they neither regulate nor
control business behavior.
4. What are the relevant Federal rules
which may duplicate, overlap, or
conflict with the rule?
Under section 3(a)(2)(C) of the Small
Business Act, 15 U.S.C. 632(a)(2)(c),
Federal agencies must use SBA’s size
standards to define a small business,
unless specifically authorized by statute
to do otherwise. In 1995, SBA published
in the Federal Register a list of statutory
and regulatory size standards that
identified the application of SBA’s size
standards as well as other size standards
used by Federal agencies (60 FR 57988
(November 24, 1995)). SBA is not aware
of any Federal rule that would duplicate
or conflict with establishing or revising
size standards.
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37421
However, the Small Business Act and
SBA’s regulations allow Federal
agencies to establish different size
standards if they believe that SBA’s size
standards are not appropriate for their
programs, with the approval of SBA’s
Administrator (see 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
existing system 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 reasons set forth in the preamble,
SBA amends 13 CFR part 121 as
follows:
PART 121—SMALL BUSINESS SIZE
REGULATIONS
1. The authority citation for part 121
continues to read as follows:
■
Authority: 15 U.S.C. 632, 634(b)(6), 662,
694a(9).
2. In § 121.201, in the table ‘‘Small
Business Size Standards by NAICS
Industry,’’ revise entries for ‘‘711110’’,
‘‘711120’’, ‘‘711130’’, ‘‘711190’’,
‘‘711211’’, ‘‘711212’’, ‘‘711219’’,
‘‘711310’’, ‘‘711320’’, ‘‘711410’’,
‘‘712110’’, ‘‘712130’’, ‘‘713110’’,
‘‘713210’’, ‘‘713290’’, ‘‘713910’’, and
‘‘713920’’ to read as follows:
■
§ 121.201. What size standards has SBA
identified by North American Industry
Classification System codes?
*
E:\FR\FM\20JNR4.SGM
*
*
20JNR4
*
*
37422
Federal Register / Vol. 78, No. 119 / Thursday, June 20, 2013 / Rules and Regulations
SMALL BUSINESS SIZE STANDARDS BY NAICS INDUSTRY
NAICS codes
Size standards
in millions of
dollars
NAICS U.S. Industry title
*
..........
..........
..........
..........
..........
..........
..........
..........
..........
..........
*
*
*
*
Theater Companies and Dinner Theaters ............................................................................
Dance Companies ................................................................................................................
Musical Groups and Artists ...................................................................................................
Other Performing Arts Companies .......................................................................................
Sports Teams and Clubs ......................................................................................................
Race Tracks ..........................................................................................................................
Other Spectator Sports .........................................................................................................
Promoters of Performing Arts, Sports and Similar Events with Facilities ............................
Promoters of Performing Arts, Sports and Similar Events without Facilities .......................
Agents and Managers for Artists, Athletes, Entertainers and Other Public Figures ............
*
*
712110 ..........
*
*
*
*
Museums ...............................................................................................................................
*
*
712130 ..........
*
*
*
*
Zoos and Botanical Gardens ................................................................................................
*
*
713110 ..........
*
*
*
*
Amusement and Theme Parks .............................................................................................
*
*
..........
..........
..........
..........
*
*
*
*
Casinos (except Casino Hotels) ...........................................................................................
Other Gambling Industries ....................................................................................................
Golf Courses and Country Clubs ..........................................................................................
Skiing Facilities .....................................................................................................................
*
711110
711120
711130
711190
711211
711212
711219
711310
711320
711410
713210
713290
713910
713920
*
*
*
*
*
[FR Doc. 2013–14708 Filed 6–19–13; 8:45 am]
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$19.0
$10.0
$10.0
$25.5
$35.5
$35.5
$10.0
$30.0
$14.0
$10.0
20JNR4
*
............................
............................
............................
............................
............................
............................
............................
............................
............................
............................
$25.5
*
............................
$25.5
*
............................
$35.5
*
............................
$25.5
$30.0
$14.0
$25.5
*
Dated: June 13, 2013.
Karen G. Mills,
Administrator.
Size standards
in number of
employees
*
............................
............................
............................
............................
*
Agencies
[Federal Register Volume 78, Number 119 (Thursday, June 20, 2013)]
[Rules and Regulations]
[Pages 37417-37422]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-14708]
-----------------------------------------------------------------------
SMALL BUSINESS ADMINISTRATION
13 CFR Part 121
RIN 3245-AG36
Small Business Size Standards: Arts, Entertainment, and
Recreation
AGENCY: U.S. Small Business Administration.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The United States Small Business Administration (SBA) is
increasing the small business size standards for 17 industries in North
American Industry Classification System (NAICS) Sector 71, Arts,
Entertainment, and Recreation, and retaining the current size standards
for the remaining eight industries in that Sector. As part of its
ongoing comprehensive size standards review, SBA evaluated all size
standards for industries in NAICS Sector 71 to determine whether they
should be retained or revised.
DATES: This rule is effective July 22, 2013.
FOR FURTHER INFORMATION CONTACT: Jon Haitsuka, Program Analyst, Size
Standards Division, (202) 205-6618 or sizestandards@sba.gov.
SUPPLEMENTARY INFORMATION: To determine eligibility for Federal small
business assistance programs, SBA establishes small business size
definitions (referred to as size standards) for private sector
industries in the United States. The SBA's existing size standards use
two primary measures of business size--average annual receipts and
number of employees. Financial assets, electric output and refining
capacity are used as size measures for a few specialized industries. In
addition, SBA's Small Business Investment Company (SBIC), 7(a), and
Certified Development Company (CDC or 504) Loan Programs determine
small business eligibility using either the industry based size
standards or alternative net worth and net income size based standards.
At the start of the current comprehensive review of SBA's small
business size standards, there were 41 different size standards levels,
covering 1,141 NAICS industries and 18 sub-industry activities (i.e.,
``exceptions'' in SBA's table of size standards). Of these, 31 were
based on average annual receipts, seven based on number of employees,
and three based on other measures. Presently, there are a total of
1,031size standards, 516 of which are based on average annual receipts,
499 on number of employees, 10 on megawatt hours, and six on average
assets.
Over the years, SBA has received comments that its size standards
have not kept up with changes in the economy, and in particular, that
they do not reflect changes in the Federal contracting marketplace and
industry structure. The last comprehensive review of 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 makes periodic
inflation adjustments to its monetary based size standards. The latest
inflation adjustment to size standards was published in the Federal
Register on July 18, 2008 (73 FR 41237).
SBA recognizes that changes in industry structure and the Federal
marketplace since the last overall review 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 determine whether existing size standards have supportable
bases relative to the current data, and to revise them, where
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.
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 to review all size standards not
less frequently than once every 5 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.
SBA has chosen not to review all size standards at one time.
Rather, it is reviewing groups of related industries on a Sector by
Sector basis.
As part of SBA's comprehensive review of size standards, the Agency
reviewed all size standards in NAICS Sector 71, Arts, Entertainment,
and Recreation, to determine whether the existing size standards should
be retained or revised. After its review, SBA published a proposed rule
for public comment in the July 18, 2012 issue of the Federal Register
(77 FR 42211) on its proposal to increase the size standards for 17
industries in NAICS Sector 71. The rule was one of a series of proposed
rules that examines industries grouped by NAICS Sector.
In conjunction with current comprehensive size standards review,
SBA developed a ``Size Standards Methodology'' for developing,
reviewing, and modifying size standards, when necessary. SBA published
the document on its Web site at www.sba.gov/size for public review and
comments, and also included it as a supporting document in the
electronic docket of the proposed rule on NAICS Sector 71 at
www.regulations.gov.
In evaluating an industry's size standard, SBA examines its
characteristics (such as average firm size, startup costs, industry
competition and distribution of firms by size) and the level and small
business share of Federal contract dollars in that industry. SBA also
examines the potential impact a size standard revision might have on
its financial assistance programs, and whether a business concern under
a revised size standard would be dominant in its industry. For the
proposed rule, SBA analyzed the characteristics of each industry in
NAICS Sector 71, mostly using a special tabulation obtained from the
U.S. Bureau of the Census from its 2007 Economic Census (the latest
available). SBA also evaluated the level and small business share of
Federal contracts in each of those industries using the data from the
Federal Procurement Data System--Next Generation (FPDS-NG) for fiscal
years 2008-2010. To evaluate the impact of changes to size standards on
its loan programs, SBA evaluated internal data on its guaranteed loan
programs for fiscal years 2008-2010.
SBA's ``Size Standards Methodology'' provides a detailed
description of its analyses of various industry and program factors and
data sources, and how the Agency uses the results to establish and
revise size standards. In the proposed rule itself, SBA detailed how it
applied its ``Size Standards Methodology'' to review and modify, where
necessary, the existing size standards for industries in NAICS Sector
71. SBA sought comments from the public on a number of issues about its
``Size Standards Methodology,'' such as whether there are alternative
methodologies that SBA should consider; whether there are alternative
or additional factors or data sources that
[[Page 37418]]
SBA should evaluate; whether SBA's approach to establishing small
business size standards makes sense in the current economic
environment; whether SBA's application of anchor size standards is
appropriate in the current economy; whether there are gaps in SBA's
methodology because of the lack of comprehensive data; and whether
there are other facts or issues that SBA should consider.
SBA sought comments on its proposal to increase size standards for
17 industries and retain the existing size standards for the remaining
eight industries in NAICS Sector 71. Specifically, SBA requested
comments on whether the size standards should be revised as proposed
and whether the proposed revisions are appropriate. SBA also invited
comments on whether its proposed eight fixed levels for receipts based
size standard are appropriate and whether it should adopt common size
standards for some industries in NAICS Sector 71.
The SBA's analyses supported keeping the current size standards for
three industries and lowering them for five industries in NAICS Sector
71. However, as SBA pointed out in the proposed rule, lowering size
standards will reduce the number of firms eligible to participate in
Federal small business assistance programs and this is counter to what
the Federal government and SBA are doing to help small businesses.
Therefore, SBA proposed to retain the current size standards for those
five industries and requested comments on whether the Agency should
lower size standards for which its analyses might support lowering
them.
Summary of Comments
SBA received only one comment to the proposed rule. However, the
commenter did not offer any comments or suggestions regarding the
proposed revisions to size standards in NAICS Sector 71. Thus, SBA is
not making any adjustment to proposed size standards based on this
comment.
The comment to the proposed rule is available for public review at
https://www.regulations.gov, using RIN-3245-AG36.
Conclusion
Based on the analyses of relevant industry and program data and
evaluation of public comments it received on the proposed rule, SBA has
decided to increase the small business size standards for 17 industries
in NAICS Sector 71 to the levels it proposed. Those industries and
their revised size standards are shown in Table 1, Summary of Revised
Size Standards in NAICS Sector 71, below.
Table 1--Summary of Revised Size Standards in NAICS Sector 71
----------------------------------------------------------------------------------------------------------------
Current size Revised size
NAICS Industry code NAICS Industry title standard ($ standard ($
million) million)
----------------------------------------------------------------------------------------------------------------
711110..................... Theater Companies and Dinner Theaters.......... $7.0 $19.0
711120..................... Dance Companies................................ $7.0 $10.0
711130..................... Musical Groups and Artists..................... $7.0 $10.0
711190..................... Other Performing Arts Companies................ $7.0 $25.5
711211..................... Sports Teams and Clubs......................... $7.0 $35.5
711212..................... Race Tracks.................................... $7.0 $35.5
711219..................... Other Spectator Sports......................... $7.0 $10.0
711310..................... Promoters of Performing Arts, Sports and $7.0 $30.0
Similar Events with Facilities.
711320..................... Promoters of Performing Arts, Sports and $7.0 $14.0
Similar Events without Facilities.
711410..................... Agents and Managers for Artists, Athletes, $7.0 $10.0
Entertainers and Other Public Figures.
712110..................... Museums........................................ $7.0 $25.5
712130..................... Zoos and Botanical Gardens..................... $7.0 $25.5
713110..................... Amusement and Theme Parks...................... $7.0 $35.5
713210..................... Casinos (except Casino Hotels)................. $7.0 $25.5
713290..................... Other Gambling Industries...................... $7.0 $30.0
713910..................... Golf Courses and Country Clubs................. $7.0 $14.0
713920..................... Skiing Facilities.............................. $7.0 $25.5
----------------------------------------------------------------------------------------------------------------
For the reasons as stated above in this final rule and in the
proposed rule, SBA has decided to retain the current receipts based
size standards for the five industries for which analytical results
suggested lowering them. The five industries are the following: NAICS
711510, Independent Artists, Writers, and Performers; NAICS 712120,
Historical Sites; NAICS 712190, Nature Parks and Other Similar
Institutions; NAICS 713120, Amusement Arcades; and NAICS 713990, All
Other Amusement and Recreation Industries. Not lowering size standards
for these industries in NAICS Sector 71 is consistent with SBA's recent
final rules on NAICS Sector 44-45, Retail Trade (75 FR 61597 (October
6, 2010)), NAICS Sector 72, Accommodation and Food Services (75 FR
61604 (October 6, 2010)), NAICS Sector 81, Other Services (75 FR 61591
(October 6, 2010)), NAICS Sector 54, Professional, Scientific and
Technical Services (77 FR 7490 (February 10, 2012)), NAICS Sector 48-
49, Transportation and Warehousing (77 FR 10943 (February 24, 2012)),
NAICS Sector 53, Real Estate and Rental and Leasing (77 FR 58747
(September 24, 2012)), NAICS Sector 61, Educational Services (77 FR
58739 (September 24, 2012)), NAICS Sector 62, Health Care and Social
Assistance (77 FR 58755 (September 24, 2012)), NAICS Sector 51,
Information (77 FR 72702 (December 6, 2012)), and NAICS Sector 56,
Administrative and Support, Waste Management and Remediation Services
(77 FR 72691 (December 6, 2012)). In each of those final rules, SBA
adopted its proposal not to reduce small business size standards for
the same reasons. SBA is also retaining the existing size standards for
three industries for which the results supported them at their current
levels. The three industries are the following: NAICS 713930, Marinas;
NAICS 713940, Fitness and Recreational Sports Centers; and NAICS
713950, Bowling Centers.
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
final rule is not a ``significant regulatory action'' for purposes of
Executive Order
[[Page 37419]]
12866. In order to help explain the need of this rule and the rule's
potential benefits and costs, SBA is providing below a Cost Benefit
Analysis in of this rule. This is also not a ``major rule'' under the
Congressional Review Act, 5 U.S.C. 800.
Cost Benefit Analysis
1. Is there a need for the regulatory action?
SBA believes that the revised changes to small business size
standards for 17 industries in NAICS Sector 71, Arts, Entertainment,
and Recreation, reflect changes in economic characteristics of small
businesses and the Federal procurement market conditions in those
industries. SBA's mission is to aid and assist small businesses through
a variety of financial, procurement, business development, and advocacy
programs. To assist the intended beneficiaries of these programs
effectively, SBA establishes distinct definitions to determine which
businesses are deemed small businesses. The Small Business Act (15
U.S.C. 632(a)) delegated to the SBA's Administrator the responsibility
for establishing definitions for small business. The Act also requires
that small business definitions vary to reflect industry differences.
The Jobs Act requires the Administrator to review at least one-third of
all size standards within each 18-month period from the date of its
enactment, and review all size standards at least every five years
thereafter. The supplementary information section of the July 18, 2012
proposed rule and this final rule explained the SBA's methodology for
analyzing a size standard for a particular industry.
2. What are the potential benefits and costs of this regulatory action?
The most significant benefit to businesses obtaining small business
status as a result of this final rule is gaining eligibility for
Federal small business assistance programs, including SBA's financial
assistance programs, economic injury disaster loans, and Federal
procurement opportunities intended for small businesses. Federal small
business programs provide targeted opportunities for small businesses
under SBA's various business development and contracting programs.
These include the 8(a), small disadvantaged businesses (SDB), small
businesses located in Historically Underutilized Business Zones
(HUBZone), women owned small businesses (WOSB), economically
disadvantaged women-owned small businesses (EDWOSB), and the service
disabled veteran owned small business (SDVOSB) Programs. Other Federal
agencies also may use SBA's size standards for a variety of regulatory
and program purposes. These programs help small businesses become more
knowledgeable, stable, and competitive. In the 17 industries in NAICS
Sector 71 for which SBA has decided to increase size standards, SBA
estimates that about 1,450 additional firms will gain small business
status and become eligible for these programs. That number is 1.3
percent of total firms that are classified as small under the current
size standards in all 25 industries in NAICS Sector 71. SBA estimates
that this will increase the small business share of total industry
receipts in that Sector from 35 percent under the current size
standards to 43 percent under the revised size standards.
The benefits of increasing size standards to a more appropriate
level will accrue to three groups: (1) Some businesses that are above
the current size standards will 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 a larger pool of small businesses
from which to draw for their small business procurement programs.
Based on the data for fiscal years 2008-2010, more than 45 percent
of total Federal contracting dollars spent in all industries in NAICS
Sector 71 were accounted for by the 17 industries for which SBA is
increasing size standards. SBA estimates that additional firms gaining
small business status in those industries under the revised size
standards could potentially obtain Federal contracts totaling up to $5
million per year under the small business, 8(a), SDB, HUBZone, WOSB,
EDWOSB and SDVOSB Programs and other unrestricted procurements. The
added competition for many of these procurements may also result in
lower prices to the Government for procurements reserved for small
businesses, although SBA cannot quantify this benefit.
Under SBA's 7(a) and 504 Loan Programs, based on the data for
fiscal years 2008-2010, SBA estimates that approximately 15 to 20
additional loans totaling $4 million to $6 million in new Federal loan
guarantees could be made to the newly defined small businesses under
the revised size standards. Under the Jobs Act, SBA can now guarantee
substantially larger loans than in the past. In addition, the Jobs Act
established an alternative size standard for SBA's 7(a) and 504 Loan
Programs for those applicants that do not meet the size standards for
their industries. That is, under the Jobs Act, if a firm applies for a
7(a) or 504 loan but does not meet the size standard for its industry,
it might still qualify if, including its affiliates, it has tangible
net worth that does not exceed $15 million and also has average net
income after Federal income taxes (excluding any carry-over losses) for
its preceding two completed fiscal years that do not exceed $5 million.
Thus, SBA finds it difficult to quantify the actual impact of the
revised size standards on its 7(a) and 504 Loan Programs.
Newly defined small businesses will also benefit from SBA's
Economic Injury Disaster Loan Program. Since this program is contingent
on the occurrence and severity of a disaster, SBA cannot make a
meaningful estimate of this impact.
To the extent that all 1,450 newly defined small firms under the
revised size standards in NAICS Sector 71 could become active in
Federal procurement programs, the revisions to size standards may
entail some additional administrative costs to the Federal Government
associated with there being more bidders for Federal small business
procurement opportunities. In addition, there will be more firms
seeking SBA guaranteed loans, more firms eligible for enrollment in the
System for Award Management (SAM) and Dynamic Small Business Search
database, and more firms seeking certification as 8(a) or HUBZone firms
or more firms qualifying for small business, WOSB, EDWOSB, SDVOSB and
SDB status. Among these newly defined small businesses seeking SBA's
assistance, there could be some additional costs associated with
compliance and verification of small business status and protests of
small business status. SBA believes that these added administrative
costs will be minimal because mechanisms are already in place to handle
these requirements.
Additionally, costs to the Federal Government may be higher on some
Federal contracts under the higher revised size standards. With a
greater number of businesses defined as small, Federal agencies may
choose to set aside more contracts for competition among small
businesses rather than using full and open competition. The movement
from unrestricted to set-aside contracting might result in competition
among fewer total bidders, although
[[Page 37420]]
there will be more small businesses eligible to submit offers. In
addition, higher costs may result when additional full and open
contracts are awarded to HUBZone businesses because of price evaluation
preference. However, these additional costs associated with fewer
bidders are expected to be minor since, by law, procurements may be set
aside for small businesses or reserved for the small business, 8(a),
HUBZone, WOSB, EDWOSB or SDVOSB Programs only if awards are expected to
be made at fair and reasonable prices.
The revised size standards may have some distributional effects
among large and small businesses. Although SBA cannot estimate with
certainty the actual outcome of gains and losses among small and large
businesses, it can identify several probable impacts. There may be a
transfer of some Federal contracts from large businesses to small
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 agencies may award
more Federal contracts to HUBZone concerns instead of large businesses
since HUBZone concerns may be eligible for price evaluation adjustments
when they compete on full and open bidding opportunities. Similarly,
currently defined small businesses may obtain fewer Federal contracts
due to the increased competition from more businesses defined as small
under the revised size standards. This transfer may be offset by more
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 small businesses under the existing size
standards. The SBA cannot estimate with precision the potential
distributional impacts of these transfers.
The revisions to the existing size standards in NAICS Sector 71,
Arts, Entertainment, and Recreation, 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 distributions
impacts that relate to Executive Order 13563 is included above in the
Cost Benefit Analysis under Executive Order 12866.
In an effort to engage interested parties in this regulatory
action, SBA presented its methodology (discussed under Supplementary
Information in the proposed rule and this rule) to various industry
associations and trade groups. SBA also met with various industry
groups to obtain their feedback on its methodology and other size
standards issues. In addition, SBA also presented its size standards
methodology to businesses in 13 cities in the U.S. and sought their
input as part of the Jobs Act tours. The presentations also included
information on the latest status of the comprehensive size standards
review and how interested parties can provide SBA with input and
feedback on the size standards review. Moreover, SBA presented the same
information to Department of Defense (DoD) contracting personnel at
their annual training session. It included updates on what size
standards rules SBA was currently reviewing and plans to review in the
future. This is important because DoD contracting provides the greatest
opportunities for and awards to small businesses.
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's 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 the July 18, 2012 proposed rule (77 FR 42211) for NAICS
Sector 71.
Furthermore, when SBA issued the proposed rule, it notified
individuals, government procurement, and companies that had in recent
years exhibited an interest by letter, email, or phone, in size
standards for NAICS Sector 71 so they could comment.
The review of size standards in NAICS Sector 71, Arts,
Entertainment, and Recreation, is consistent with Section 6 of
Executive Order 13563 calling for retrospective analyses of existing
rules. The last overall 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 all
size standards to ensure that existing size standards have supportable
bases and to revise them when necessary. In addition, the Jobs Act
directs 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 purposes of Executive Order 13132, SBA has determined that this
final rule will not have substantial, direct effects on the States, on
the relationship between the national government and the States, or on
the distribution of power and responsibilities among the various levels
of government. Therefore, SBA has determined that this final rule has
no Federalism implications warranting preparation of a Federalism
assessment.
Paperwork Reduction Act
For the purpose of the Paperwork Reduction Act, 44 U.S.C. Ch. 35,
SBA has determined that this final rule would not impose any new
reporting or record keeping requirements.
Final Regulatory Flexibility Analysis
Under the Regulatory Flexibility Act (RFA), this final rule may
have a significant impact on a substantial number of small entities in
NAICS Sector 71, Arts, Entertainment, and Recreation. As described
above, this rule may affect small entities seeking
[[Page 37421]]
Federal contracts, SBA's 7(a) and 504 Guaranteed Loans, SBA's Economic
Injury Disaster Loans, and various small business benefits under other
Federal programs.
Immediately below, SBA sets forth a final regulatory flexibility
analysis of this final 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 entities 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 which may duplicate, overlap or conflict with
the rule? and (5) What alternatives will allow the Agency to accomplish
its regulatory objectives while minimizing the impact on small
entities?
1. What are the need for and objective of the rule?
Most of SBA's size standards for the Arts, Entertainment, and
Recreation industries had not been reviewed since the 1980s.
Technological changes, productivity growth, international competition,
mergers and acquisitions and updated industry definitions may have
changed the structure of many industries in that Sector. Such changes
can be sufficient to support revisions to size standards for some
industries. Based on the analysis of the latest industry and program
data available, SBA believes that the revised standards in this rule
more appropriately reflect the size of businesses in those industries
that need Federal assistance. Additionally, the Jobs Act requires SBA
to review all size standards and make appropriate adjustments to
reflect current data and market conditions.
2. What are SBA's description and estimate of the number of small
entities to which the rule will apply?
SBA estimates that approximately 1,450 additional firms will become
small because of increases in size standards in 17 industries in NAICS
Sector 71. That represents 1.3 percent of total firms that are
classified as small under the current size standards in all 25
industries in that Sector. This will result in an increase in the small
business share of total industry receipts in those industries from
about 35 percent under the current size standards to nearly 43 percent
under the revised size standards. SBA does not anticipate a significant
competitive impact on smaller businesses in these industries because of
this rule. The revised size standards will enable more small businesses
to retain their small business status for a longer period. Under
current size standards, many small businesses may have lost their
eligibility or found it difficult to compete with companies that are
significantly larger than they are and this final rule attempts to
correct that impact. SBA believes these changes will have a positive
impact for existing small businesses and for those that have either
exceeded or are about to exceed current size standards.
3. What are the projected reporting, record keeping, and other
compliance requirements of the rule and an estimate of the classes of
small entities which will be subject to the requirements?
Revising size standards does not impose any additional reporting or
record keeping requirements on small entities. However, qualifying for
Federal procurement and a number of other Federal programs requires
that entities register in the System for Award Management (SAM).
Therefore, businesses opting to participate in those programs must
comply with SAM requirements. There are no costs associated with SAM
registration. Revising size standards alters access to SBA's and other
Federal programs that are designed to assist small businesses, but does
not impose a regulatory burden because they neither regulate nor
control business behavior.
4. What are the relevant Federal rules which may duplicate, overlap, or
conflict with the rule?
Under section 3(a)(2)(C) of the Small Business Act, 15 U.S.C.
632(a)(2)(c), Federal agencies must use SBA's size standards to define
a small business, unless specifically authorized by statute to do
otherwise. In 1995, SBA published in the Federal Register a list of
statutory and regulatory size standards that identified the application
of SBA's size standards as well as other size standards used by Federal
agencies (60 FR 57988 (November 24, 1995)). SBA is not aware of any
Federal rule that would duplicate or conflict with establishing or
revising size standards.
However, the Small Business Act and SBA's regulations allow Federal
agencies to establish different size standards if they believe that
SBA's size standards are not appropriate for their programs, with the
approval of SBA's Administrator (see 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 existing
system 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 reasons set forth in the preamble, SBA amends 13 CFR part 121
as follows:
PART 121--SMALL BUSINESS SIZE REGULATIONS
0
1. The authority citation for part 121 continues to read as follows:
Authority: 15 U.S.C. 632, 634(b)(6), 662, 694a(9).
0
2. In Sec. 121.201, in the table ``Small Business Size Standards by
NAICS Industry,'' revise entries for ``711110'', ``711120'',
``711130'', ``711190'', ``711211'', ``711212'', ``711219'', ``711310'',
``711320'', ``711410'', ``712110'', ``712130'', ``713110'', ``713210'',
``713290'', ``713910'', and ``713920'' to read as follows:
Sec. 121.201. What size standards has SBA identified by North
American Industry Classification System codes?
* * * * *
[[Page 37422]]
Small Business Size Standards by NAICS Industry
----------------------------------------------------------------------------------------------------------------
Size standards Size standards
NAICS codes NAICS U.S. Industry title in millions of in number of
dollars employees
----------------------------------------------------------------------------------------------------------------
* * * * * * *
711110................... Theater Companies and Dinner Theaters............ $19.0 ................
711120................... Dance Companies.................................. $10.0 ................
711130................... Musical Groups and Artists....................... $10.0 ................
711190................... Other Performing Arts Companies.................. $25.5 ................
711211................... Sports Teams and Clubs........................... $35.5 ................
711212................... Race Tracks...................................... $35.5 ................
711219................... Other Spectator Sports........................... $10.0 ................
711310................... Promoters of Performing Arts, Sports and Similar $30.0 ................
Events with Facilities.
711320................... Promoters of Performing Arts, Sports and Similar $14.0 ................
Events without Facilities.
711410................... Agents and Managers for Artists, Athletes, $10.0 ................
Entertainers and Other Public Figures.
* * * * * * *
712110................... Museums.......................................... $25.5 ................
* * * * * * *
712130................... Zoos and Botanical Gardens....................... $25.5 ................
* * * * * * *
713110................... Amusement and Theme Parks........................ $35.5 ................
* * * * * * *
713210................... Casinos (except Casino Hotels)................... $25.5 ................
713290................... Other Gambling Industries........................ $30.0 ................
713910................... Golf Courses and Country Clubs................... $14.0 ................
713920................... Skiing Facilities................................ $25.5 ................
* * * * * * *
----------------------------------------------------------------------------------------------------------------
Dated: June 13, 2013.
Karen G. Mills,
Administrator.
[FR Doc. 2013-14708 Filed 6-19-13; 8:45 am]
BILLING CODE 8025-01-P