Small Business Size Standards for Manufacturing, 4469-4492 [2016-00924]

Download as PDF Federal Register / Vol. 81, No. 16 / Tuesday, January 26, 2016 / Rules and Regulations with a separate distinct size standard, and that industry accounts for 50 percent or more of the value of the entire procurement, then the proper size standard is the one for that particular industry, and not the Environmental Remediation Service size standard. * * * * * 18. NAICS code 541519—An Information Technology Value Added Reseller (ITVAR) provides a total solution to information technology acquisitions by providing multivendor hardware and software along with significant value added services. Significant value added services consist of, but are not limited to, configuration consulting and design, systems integration, installation of multi-vendor computer equipment, customization of hardware or software, training, product technical support, maintenance, and end user support. For purposes of Government procurement, an information technology procurement classified under this exception and 150employee size standard must consist of at least 15% and not more than 50% of value added services, as measured by the total contract price. In addition, the offeror must comply with the manufacturing performance requirements, or comply with the nonmanufacturer rule by supplying the products of small business concerns, unless SBA has issued a class or contract specific waiver of the non-manufacturer rule. If the contract consists of less than 15% of value added services, then it must be classified under a NAICS manufacturing industry. If the contract consists of more than 50% of value added services, then it must be classified under the NAICS industry that best describes the predominate service of the procurement. * * * * * 3. Amend § 121.406 by revising paragraph (b)(3) and paragraphs (b)(4) introductory text and (b)(5) introductory text to read as follows: ■ § 121.406 How does a small business concern qualify to provide manufactured products or other supply items under a small business set-aside, service-disabled veteran-owned small business set-aside, WOSB or EDWOSB set-aside, or 8(a) contract? mstockstill on DSK4VPTVN1PROD with RULES3 * * * * * (b) * * * (3) The nonmanufacturer rule applies only to procurements that have been assigned a manufacturing or supply NAICS code, or the Information Technology Value Added Resellers (ITVAR) exception to NAICS code 541519. The nonmanufacturer rule does not apply to contracts that have been assigned a service (except for the ITVAR exception to NAICS code 541519), construction, or specialty trade construction NAICS code. (4) The nonmanufacturer rule applies only to the supply component of a requirement classified as a manufacturing, supply, or ITVAR contract. If a requirement is classified as VerDate Sep<11>2014 22:00 Jan 25, 2016 Jkt 238001 a service contract, but also has a supply component, the nonmanufacturer rule does not apply to the supply component of the requirement. * * * * * (5) The Administrator or designee may waive the requirement set forth in paragraph (b)(1)(iv) of this section under the following two circumstances: * * * * * Maria Contreras-Sweet, Administrator. [FR Doc. 2016–00922 Filed 1–25–16; 8:45 am] BILLING CODE 8025–01–P SMALL BUSINESS ADMINISTRATION 13 CFR Part 121 RIN 3245–AG50 Small Business Size Standards for Manufacturing U.S. Small Business Administration. ACTION: Final rule. AGENCY: The United States Small Business Administration (SBA) is increasing small business size standards for 209 industries in North American Industry Classification System (NAICS) Sector 31–33, Manufacturing. SBA is also modifying the size standard for NAICS 324110, Petroleum Refiners, by increasing the refining capacity component of the size standard to 200,000 barrels per calendar day for businesses that are primarily engaged in petroleum refining and by eliminating the requirement that 90 percent of the output to be delivered be refined by the successful bidder from either crude oil or bona fide feedstocks. The Agency is also updating Footnote 5 to NAICS 326211 to reflect the current Census Product Classification Codes 3262111 and 3262113. As part of its ongoing comprehensive size standards review, SBA evaluated employee based size standards for all 364 industries in NAICS Sector 31–33 to determine whether they should be retained or revised. This rule is one of a series of rules that result from SBA’s review of size standards of industries grouped by NAICS Sector. DATES: This rule is effective February 26, 2016. FOR FURTHER INFORMATION CONTACT: Jorge Laboy-Bruno, Ph.D., Economist, Size Standards Division, (202) 205–6618 or sizestandards@sba.gov. SUPPLEMENTARY INFORMATION: To determine eligibility for Federal small business assistance programs, SBA SUMMARY: PO 00000 Frm 00035 Fmt 4701 Sfmt 4700 4469 establishes small business size definitions (referred to as size standards) for private sector industries in the United States. The SBA’s size standards generally use two primary measures of business size, average annual receipts and average 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), Certified Development Company (CDC/ 504) and 7(a) Loan Programs determine small business eligibility using either the industry based size standards or an alternative size standard based on both net worth and net income. At the start of the current comprehensive review of size standards, there were 41 different size standards, covering 1,141 NAICS industries and 18 ‘‘exceptions.’’ in SBA’s table of size standards. Of these, 31 were based on average annual receipts, seven on average number of employees, and three on other measures. Presently, there are 28 different size standards, covering 1047 NAICS industries and 16 ‘‘exceptions.’’ Of these NAICS industries and exceptions, 533 are covered by size standards based on average annual receipts, 509 on average number of employees, and five on average assets. Over the years, some members of the public have remarked that SBA’s 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 size standards review was in the late 1970s and early 1980s. Size standards reviews since then, until this comprehensive review, were generally limited to a few specific industries in response to requests from the public and from Federal agencies. SBA also makes periodic inflation adjustments to its monetary based size standards. The latest inflation adjustment to size standards was effective July 14, 2015 (79 FR 33647 (June 12, 2014)). Because of changes in industry structure and the Federal marketplace since the last overall review, current data no longer supported existing size standards for some industries. Accordingly, in 2007, SBA began a comprehensive review to determine whether existing size standards are consistent with current data, and to revise 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), 111 Public Law 240, 124 Stat. 2504, Sep. 27, 2010. The Jobs Act E:\FR\FM\26JAR3.SGM 26JAR3 mstockstill on DSK4VPTVN1PROD with RULES3 4470 Federal Register / Vol. 81, No. 16 / Tuesday, January 26, 2016 / Rules and Regulations 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 every18-month period from the date of its enactment and review of 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, ‘‘Improving Regulation and Regulatory Review.’’ SBA has chosen not to review all size standards at one time. Rather, the Agency is reviewing groups of related industries on an NAICS Sector by Sector basis. As part of SBA’s comprehensive size standards review, grouped by NAICS Sector, the Agency reviewed the 364 size standards for industries in NAICS Sector 31–33, Manufacturing, to determine whether they should be retained or revised. After its review, SBA published in the September 10, 2014 issue of the Federal Register (79 FR 54145) a proposed rule to increase size standards for 209 industries in NAICS Sector 31–33, Manufacturing. SBA also proposed to amend Footnote 4 to NAICS 324110, Petroleum Refiners, in its table of size standards in two ways: (1) By increasing the refining capacity component of the size standard from 125,000 to 200,000 barrels per calendar day total capacity for businesses that are primarily engaged in petroleum refining, and (2) by eliminating the requirement that 90 percent of the output to be delivered be refined by the successful bidder from either crude oil or bona fide feedstocks. SBA also proposed amending Footnote 5 to NAICS 326211, Tire Manufacturing (except Retreading), to reflect the current Census Product Classification Codes 3262111 and 3262113. As part of ongoing comprehensive size standards review, SBA developed a ‘‘Size Standards Methodology’’ White Paper 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 included it as a supporting document in the electronic docket of the proposed rule at www.regulations.gov. In evaluating an industry, SBA generally examines its characteristics (such as average firm size, startup costs, industry competition, and distribution of firms by size) and the level and share of Federal contract dollars that small businesses receive. SBA also examines VerDate Sep<11>2014 22:00 Jan 25, 2016 Jkt 238001 the potential impact a size standard revision might have on its financial assistance programs, and whether a business under a revised size standard would be dominant in its industry. SBA analyzed the characteristics of every industry in NAICS 31–33, using mostly a special tabulation obtained from the U.S. Bureau of the Census from its 2007 Economic Census (the latest available). For the proposed rule, SBA also evaluated the small business share of Federal contracts in each of those industries using data from the Federal Procurement Data System—Next Generation (FPDS–NG) for fiscal years 2009–2011. To evaluate the impact of changes to size standards on its loan programs, SBA analyzed internal data on its guaranteed loan programs for fiscal years 2010–2012. In this final rule, SBA has updated the impacts of size standards changes using the FPDS–NG and loan data for fiscal years 2012– 2014. SBA’s ‘‘Size Standards Methodology’’ White Paper 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 September 10, 2014 proposed rule, SBA detailed how it applied its ‘‘Size Standards Methodology’’ to review and modify when necessary, the existing size standards for industries in NAICS Sector 31–33. SBA sought comments from the public on a number of issues about its ‘‘Size Standards Methodology,’’ such as whether SBA should consider other approaches; whether SBA should evaluate alternative or additional factors or data sources; whether SBA’s manner of 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 current or comprehensive data; and whether there are other facts or issues that SBA should consider. SBA sought comments on its proposed size standards together with other issues that could affect a final determination. Specifically, SBA requested comments on the following: 1. SBA proposed five levels of employee based size standards for industries in Manufacturing and for industries in other Sectors that have employee based size standards (except for Wholesale Trade and Retail Trade): 500 employees, 750 employees, 1,000 employees, 1,250 employees, and 1,500 employees. SBA invited comments on PO 00000 Frm 00036 Fmt 4701 Sfmt 4700 whether these were appropriate levels and requested suggestions for alternatives, if commenters thought them more appropriate. 2. Consistent with its policy of not lowering any size standards in its recently completed proposed and final rules on receipts based size standards, SBA proposed retaining the current 500employee minimum and 1,500employee maximum size standards for all industries in the Manufacturing Sector. In its ‘‘Size Standards Methodology,’’ available at www.sba.gov/size, SBA had proposed setting the minimum size standard for these industries at 250 employees and the maximum size standard at 1000 employees. That would entail lowering size standards for some industries. SBA invited comments on whether it should maintain the 500-employee minimum and the 1,500-employee maximum size standards or lower them to 250 employees and 1,000 employees, respectively, as the Agency proposed in its ‘‘Size Standards Methodology.’’ SBA requested suggestions on alternative minimum and maximum levels, if commenters thought them more appropriate. For the same reason, SBA also proposed to retain the current size standards for 19 industries when analytical results might support lowering them. SBA had sought comments on whether SBA should lower them solely based on its analysis or retain them at their current levels in view of current economic conditions. 3. SBA sought feedback on whether it should adjust employee based size standards for labor productivity growth. SBA periodically increases receipts based size standards for inflation. Should SBA take labor productivity growth and technological change into consideration when it reviews employee based standards? If so, what data are available to assist SBA in evaluating such factors? What if such an evaluation leads to lower size standards for some industries? How should SBA apply the results to its size standards? 4. SBA sought feedback on whether its proposal to increase size standards for 209 industries and retain current size standards for 155 industries is appropriate, given the economic characteristics of each industry reviewed in the proposed rule. SBA also sought feedback and suggestions on alternative size standards, if commenters thought them more appropriate. 5. SBA invited comments on its proposal to increase the capacity component of the Petroleum Refiners (NAICS 324110) size standard from 125,000 barrels per calendar day (BPCD) E:\FR\FM\26JAR3.SGM 26JAR3 Federal Register / Vol. 81, No. 16 / Tuesday, January 26, 2016 / Rules and Regulations mstockstill on DSK4VPTVN1PROD with RULES3 total Operable Atmospheric Crude Oil Distillation capacity to 200,000 BPCD and retain the employee component at the current 1,500-employee level. SBA also welcomed comments on its proposal to allow business concerns to qualify either under the 1,500-employee size standard or under the 200,000 BPCD capacity size standard, if the firm, together with its affiliates, is primarily engaged in petroleum refining. Finally, SBA also requested feedback on its proposal to eliminate the requirement that ‘‘[t]he total product to be delivered under the contract must be at least 90 percent refined by the successful bidder from either crude oil or bona fide feedstocks.’’ 6. SBA’s proposed size standards were based on 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 of the evaluated industries. SBA invited comments on these factors and/or suggestions on other factors that it should consider when evaluating or revising employee based size standards. SBA also sought information on relevant data sources, other than what it uses, if available. 7. SBA gave equal weight to each of the five primary factors in all industries. SBA asked for 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. SBA requested that recommendations to weigh some factors more than others include suggested weights for each factor along with supporting information. 8. For analytical simplicity and efficiency, in the proposed rule, SBA 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 welcomed any comments on this procedure and suggestions on alternative methods. Summary and Discussion of Comments SBA received 26 comments to the proposed rule, but only 17 were unique comments as some commenters submitted the same comment more than once. All of the comments are available at www.regulations.gov (RIN 3245– AG50) and are summarized and discussed below. Comments on NAICS 324110, Petroleum Refiners Footnote 4 of SBA’s table of size standards relates to NAICS 324110, VerDate Sep<11>2014 22:00 Jan 25, 2016 Jkt 238001 Petroleum Refiners. SBA proposed to amend Footnote 4 in two ways: (1) By increasing the refining capacity component of the size standard from 125,000 barrels per calendar day (BPCD) total capacity to 200,000 BPCD total capacity for businesses that are primarily engaged in petroleum refining, and (2) by eliminating the requirement that 90 percent of the output to be delivered be refined by the successful bidder from either crude oil or bona fide feedstocks. SBA received only one comment on these proposed changes. Specifically, the commenter expressed concerns about removing the requirement that 90 percent of the output to be delivered be refined by the successful bidder from either crude oil or bona fide feedstocks. The commenter contended that the change would have an adverse impact on small businesses under NAICS 424720, Petroleum and Petroleum Product Merchant Wholesalers, particularly those wishing to participate in the Defense Logistics Agency’s (DLA) bulk fuel small business set aside program. To mitigate this, the commenter suggested a provision allowing the procuring agency to source refined petroleum products from small businesses in NAICS 424720 under a small business set-aside program. Assuming that waivers of the nonmanufacturer rule will be eliminated under the proposed rule, the commenter suggested some changes to the waiver rule. SBA’s Response The changes affect only the small business eligibility of petroleum refiners. They do not affect the eligibility of wholesalers and other suppliers of petroleum products. Companies that qualify as small for supplying petroleum products they did not manufacture or produce can continue to qualify as small under SBA’s nonmanufacturer rule (13 CFR 121.406(b)). Under the nonmanufacturer rule, a business is deemed small if it has 500 or fewer employees (including its affiliates), is primarily engaged in the retail or wholesale trade and normally sells the type of item being supplied, takes ownership or possession of the product, and provides the product of a small manufacturer (in this case, the product of a small petroleum refiner). The proposed changes do not affect the 500-employee nonmanufacturer size standard and hence the eligibility of wholesalers and dealers of petroleum products under the nonmanufacturer rule. Based on evaluation of relevant industry and procurement data and PO 00000 Frm 00037 Fmt 4701 Sfmt 4700 4471 public comments to the proposed rule, in this final rule, SBA is adopting the changes to the size standard for NAICS 324110, as proposed. Specifically, SBA is increasing the refining capacity component of the Petroleum Refiners (NAICS 324110) size standard from 125,000 BPCD to 200,000 BPCD total capacity for businesses that are, together with their affiliates, primarily engaged in refining crude petroleum into refined petroleum products. A firm’s ‘‘primary industry’’ is determined in accordance with 13 CFR 121.107. In addition, the final rule eliminates the requirement that 90 percent of output being delivered is refined by a successful bidder. Accordingly, SBA also revises Footnote 4 of SBA’s table of size standards to reflect these changes. Under the revised size standard, for purposes of Federal procurement, a petroleum refiner can qualify as small under the 1,500-employee size standard or under the 200,000 BPCD total capacity size standard. To qualify under the capacity size standard, the firm, together with its affiliates, must be primarily engaged in refining crude petroleum into refined petroleum products. SBA is removing the requirement that 90 percent of the output to be delivered be refined by the successful bidder from either crude oil or bona fide feedstocks because the general requirement on a supply contract that is set aside for small business is that the small business manufacturer must perform 50 percent of the cost of manufacturing, or may not subcontract more than 50 percent of the contract to another firm. Comments on NAICS 316210, Footwear Manufacturing SBA received seven comments on NAICS 316210, Footwear Manufacturing. The current size standard for NAICS 316210 is 1,000 employees and SBA proposed to retain it at the current level. Four comments supported SBA’s proposal, while two opposed it. The seventh comment was ambiguous with respect to the size standard. These comments and SBA’s responses are discussed below. Comments Supporting the Current 1,000-Employee Size Standard for NAICS 316210 Three footwear manufacturers supported maintaining the current 1,000-employee size standard for NAICS 316210. All three stated that they are the major and continuous suppliers to the U.S. military, and footwear products they manufacture meet the specifications as required by the U.S. Department of Defense (DoD) and the E:\FR\FM\26JAR3.SGM 26JAR3 mstockstill on DSK4VPTVN1PROD with RULES3 4472 Federal Register / Vol. 81, No. 16 / Tuesday, January 26, 2016 / Rules and Regulations Berry Amendment (10 U.S.C. 2533a). The Berry Amendment requires DoD to give preference in procurement to domestically produced, manufactured, or home-grown products, most notably food, clothing, fabrics, and specialty metals. Normally, one would expect special manufacturing requirements to point to the need for a larger size standard, not lower. Additionally, all three argued that, unlike large footwear manufacturers with diversified market and product bases, they rely heavily on small business contracts from the U.S. Defense Logistics Agency (DLA) for their survival. Two of these commenters also agreed with SBA’s position of not reducing size standards in the current economic environment. The first commenter explained that footwear contractors to DoD are often torn between two forces: (1) The need to increase the number of employees to meet DoD’s needs, and (2) the need to maintain small business status to compete for DoD contracts. The commenter maintained that footwear manufacturing is highly labor intensive and DoD contract awards and their completions are associated with significant changes in employee headcounts. Significant swings in employee counts also occur with elevated demands for footwear by DoD during times of war, the commenter added. The commenter argued that retaining the current 1,000-employee size standard enables small businesses to meet DoD’s needs without jeopardizing their small business status. This would also minimize the frequency of swings between small and large business status among footwear contractors and the impact on the DoD’s supply chain, the commenter added. The same commenter stated that it relies on its small business status to be able to compete with large businesses. Many large businesses in the footwear industry are diverse, multi-national corporations with several thousand employees with significantly more resources and cost efficiencies, the commenter explained. The commenter asserted that DoD contracts are often awarded based on the lowest price where large businesses have significant cost advantages, and would be able to squeeze out small businesses if there were no small business protection. The 1,000-employee size standard helps small footwear manufacturers protect themselves as suppliers to DoD, the commenter concluded. The second commenter also maintained that many contracts it received to supply combat boots to the U.S. military were awarded because of its small business status. Unless the VerDate Sep<11>2014 22:00 Jan 25, 2016 Jkt 238001 small business size standard remains at 1,000 employees, its future will be in jeopardy, the commenter added. The commenter asserted that lowering the size standard would have a negative impact on its business and employees it supports. Any change in the size standard below the 1,000-employee level would definitely have a negative impact on its ability to continue manufacturing footwear for DoD and the industry, the commenter noted. The third commenter, whose primary customers include DoD/DLA, supported keeping the 1,000-employee size standard because it allows for employment fluctuations during the course of contract performance. The commenter stated that, prior to October 1, 2012, when the size standard for NAICS 316210 was 500 employees, the majority of DoD contracts for combat boots went to large businesses with several thousand employees against which the company had a difficult time competing on a full and open basis. There are significant differences in resources available to companies with many thousands of employees versus those with less than 1,000 employees, the commenter added. To demonstrate that the company has been the foremost innovator for military footwear, the commenter provided numerous new combat boots it developed over the years. In light of the decimation of U.S. footwear manufacturing industry by imports reducing its share of all footwear purchase in the U.S. to less than 2 percent in 2013, the 500employee footwear manufacturing size standard established more than a half century ago has grown out of date with the realities of the industry, the commenter explained. This commenter also stated that because the footwear industry is highly labor intensive, one DoD award can easily cause a contractor’s employment level to increase by 10–20 percent or more, resulting in a change to its status from a small business to a large business during the course of the contract. This can be very disruptive to the company and its employees, the commenter added. The commenter also provided a detailed analysis of average firm size, startup costs and entry barriers, industry competition, and Federal contracting trends in support of SBA’s proposal to maintain the 1,000-employee size standard for Footwear Manufacturing. If the size standard were to revert to 500 employees for NAICS 316210, it would have a lasting negative impact on its business and harm the areas where its employees live, the commenter concluded. PO 00000 Frm 00038 Fmt 4701 Sfmt 4700 SBA also received a joint comment from two elected officials supporting the 1,000-employee size standard for Footwear Manufacturing on behalf of a footwear manufacturer operating factories in their Districts. They maintained that the company manufactures its Berry Amendmentcompliant footwear in the U.S. and is a major supplier to the U.S. military. They supported SBA’s proposal to maintain the current 1,000-employee size standard for Footwear Manufacturing in light of decreases in DLA contracts for military boots as it would help the company remain competitive in the market. The commenters added that lowering the size standard is not in the best interest of small footwear manufacturers in the current economic environment. Comments Opposing the Current 1,000Employee Size Standard for NAICS 316210 SBA received two comments opposing the 1,000-employee size standard for footwear manufacturers. One was from a footwear manufacturing subsidiary of a large multi-national company and the other was from an elected official. These comments and SBA’s responses are below. The first commenter argued that in 2012, SBA, without prior notice or opportunity to comment, issued an interim final rule to revise size standards to conform to NAICS 2012. The commenter also questioned SBA’s justification for using an interim final rule (IFR). The commenter asserted that the 1,000-employee size standard for Footwear Manufacturing was adopted solely for administrative reasons without substantive analyses of industry and Federal contracting data as required by the Small Business Act or SBA’s own size standards methodology. The commenter further argued that SBA consolidated five separate footwear manufacturing NAICS codes into one footwear manufacturing code (NAICS 316210) and changed the size standard from 500 employees to 1,000 employees by arbitrarily selecting the highest size standard in the group. The commenter added that SBA did not provide a detailed analysis and justification to establish a single size standard for a group of 4-digit NAICS codes as required by 15 U.S.C. 632(a)(7). The commenter maintained that the increase of size standard to 1,000 employees has allowed one or two firms between 500 employees and 1,000 employees to become dominant in the military footwear industry. The commenter contends that has harmed truly small businesses by forcing them to compete E:\FR\FM\26JAR3.SGM 26JAR3 mstockstill on DSK4VPTVN1PROD with RULES3 Federal Register / Vol. 81, No. 16 / Tuesday, January 26, 2016 / Rules and Regulations against much larger firms even in small business set aside procurements, as well as large businesses by forcing agencies to use small business set asides and precluding them from participating in the market. The commenter claimed that the current proposed rule and proposed size standards are fundamentally flawed. The commenter contended that the proposed rule does not meet the requirements of the Jobs Act because the Agency has not held two public forums in different geographic regions of the country as required by the Jobs Act. The commenter claimed that the actual industry data not only fails to support the current 1,000-employee size standard for Footwear Manufacturing, but supports lowering it to below 500 employees. In addition, the commenter argued that SBA failed to explain how the 1,000-employee size standard is appropriate for Footwear Manufacturing. The commenter stated that in addition to being based on the faulty 2012 IFR, the proposed size standard for Footwear Manufacturing is based on insufficient data and is not supported by the publicly available data. The commenter argued that the proposed rule provides no data for startup costs, industry competition, or size distribution of firms relating to the footwear manufacturing industry. Similarly, there is no discussion on secondary factors (such as technological changes, industry growth trends, and SBA financial assistance and program factors), the commenter contended. The commenter maintained that SBA has not published data related to the vast majority of the primary factors it must consider and has not provided sufficient analysis of the size standard. SBA’s failure to gather and consider data on each of the required factors demonstrates that the rulemaking is legally deficient, the commenter argued. The commenter argued that the limited data SBA provides does not support the 1,000-employee size standard for military footwear manufacturing; the actual data require a lower size standard. The commenter stated that, with the 1,000-employee size standard, every significant domestic manufacturer of military footwear, except for two companies, is now considered a small business. The commenter maintained that publicly available Federal procurement data show that SBA’s improper change to a 1,000-employee size standard has allowed ‘‘small business’’ to take a substantial share of the military footwear market. The commenter alleged that SBA’s data on Federal contracting is inaccurate because the VerDate Sep<11>2014 22:00 Jan 25, 2016 Jkt 238001 Agency has willfully and arbitrarily excluded Federal contracting data after October 2012 from its analysis. For example, SBA asserts that small businesses account for 7.8 percent of the Federal footwear market, while FPDS– NG demonstrates that the actual percentage is much higher, the commenter claimed. The commenter contended that the 1,000-employee size standard for the footwear manufacturing industry has created a situation where one firm is now dominant in the industry. By raising the size standard from 500 employees to 1,000 employees, SBA has allowed two previously large firms to be reclassified as small, such that six of the eight companies in the industry are ‘‘small’’ businesses, the commenter maintained. Accounting for more than 28 percent of fiscal year 2014 dollars spent in NAICS 316210 nationwide and more than twice the share of other small business, one small business has become dominant in the industry, the commenter argued. SBA cannot adopt size standards which would cause a concern to become dominant in its field of operation, the commenter added. The commenter argued that SBA has provided no data to support its statement that no individual firm at or below the proposed size standards will be large enough to dominate its field of operation. SBA has not performed such an analysis with respect to the footwear manufacturing industry and failed to comply with the statutory requirement that small businesses are only those that are not dominant in their field of operation, the commenter alleged. The commenter argued that SBA’s position not to lower size standards, even when its analysis might support a reduction, is arbitrary and capricious and violates the requirements of the Act and SBA’s own methodology. This ‘‘policy’’ is inconsistent with congressional intent and SBA’s mission to aid, counsel, assist and protect the interests of small business concerns, the commenter maintained. The commenter added that this policy results in otherwise large businesses being identified as small and being afforded special treatment that was intended for small businesses, with repercussions for the entire industry that SBA is required to consider. The commenter contended that there is no basis to support SBA’s assertion that not lowering size standards would create jobs. Changing size standards would have no impact on the government’s demands for goods and services and job creation, the commenter explains. In other words, the commenter suggested that there is no impact on the economy and job creation PO 00000 Frm 00039 Fmt 4701 Sfmt 4700 4473 whether the contracts are performed by large or small businesses. The commenter further argued that SBA failed to consider the impacts the size standard changes would have by precluding certain companies from Federal opportunities or by forcing truly small businesses to compete against otherwise large businesses. The commenter argued that to comply with U.S. military requirements and the Berry Amendment, military footwear manufacturing involves a very distinct production process from commercial footwear manufacturing. Thus, the commenter recommended that SBA create a military footwear manufacturing exception to NAICS 316210, with a size standard of 500 employees. The commenter argued that, given the special production requirements necessary to comply with the Berry Amendment, the military footwear industry supports a separate industry designation as an exception to NAICS 316210. The commenter recommended that SBA return the size standard for Footwear Manufacturing to 500 employees and create a separate size standard for the military footwear industry as an exception to NAICS 316210 with a size standard well below 500 employees. The second commenter, an elected official, expressed concerns about the size standard for Footwear Manufacturing. The commenter contended that the size standard for Footwear Manufacturing, increased in 2012 from 500 employees to 1,000 employees, not only endangers an already fragile footwear manufacturing base, but also negatively affects the small businesses the proposed rule is designed to assist. The commenter maintained that, with only a limited number of companies remaining that can produce Berry Amendment compliant footwear, the size standard change for Footwear Manufacturing will have a detrimental impact on the military’s ability to procure high quality and consistent products. The commenter added that the proposed 1,000-employee size standard for Footwear Manufacturing has created a dominant firm within the size standard contradicting the intent of the proposed rule. The commenter recommended that SBA reconsider the proposed rule and return the small business size standard for Footwear Manufacturing to 500 employees. This will not only ensure fair competition among the few remaining Berry compliant footwear manufacturers, but will also preserve the military’s ability to obtain consistent quality footwear, the commenter concluded. E:\FR\FM\26JAR3.SGM 26JAR3 4474 Federal Register / Vol. 81, No. 16 / Tuesday, January 26, 2016 / Rules and Regulations mstockstill on DSK4VPTVN1PROD with RULES3 Another commenter supported a change to NAICS 316210 allowing a separate classification for the Berry Amendment footwear. The commenter also supported changing the small business classification to make the business field more competitive. However, it was not clear whether the comment was for increasing or decreasing the size standard for Footwear Manufacturing. SBA’s Response Every five years, with a notice and comment process, the Office of Management and Budget (OMB) reviews and updates the NAICS industry definitions to reflect changes in the U.S. economy. In each NAICS update, OMB may create new industries and merge or modify others. In the 2012 update, effective January 1, 2012, OMB merged the five footwear manufacturing industries into a single, new NAICS industry—NAICS 316210, Footwear Manufacturing. Thus, the commenter’s statement that SBA consolidated the five industries into one category is not accurate. When OMB merges multiple NAICS industries or their parts into a single industry, SBA must determine a size standard for the new industry when adopting the updated NAICS to its table of size standards. For this, as explained in the IFR, SBA used a bright-line approach to adopting the highest size standard among the merged industries as the size standard for the new industry. Of the five merged footwear manufacturing industries, one had a 1,000-employee size standard, while four had a 500-employee size standard. Accordingly, SBA adopted a 1,000employee size standard for the new footwear manufacturing industry. SBA applied the same approach to determine the size standard for about 25 other new or modified industries in NAICS 2012. SBA had applied this approach to update its size standards in response to the 2002 and 2007 NAICS updates with no adverse comments. To do otherwise and adopt a lower size standard would result in firms being disqualified from small business status without any analysis, comment or opportunity for review. There is no evidence that SBA’s approach has ever resulted in firms that are dominant in the industry qualifying as small business concerns. After receiving no inter-agency comments, SBA published the updated size standards as an IFR on August 20, 2012 (77 FR 49991), with an effective date of October 1, 2012. SBA provided a detailed justification for using the IFR with an effective date of October 1, 2012. The commenter’s argument that VerDate Sep<11>2014 22:00 Jan 25, 2016 Jkt 238001 SBA provided no opportunity to comment on the rule is incorrect. SBA provided a 60-day comment period for the public and other concerned parties to comment on the size standards changes adopted in the interim final rule. SBA received only one comment on the IFR, which was unrelated to the 1,000-employee size standard for NAICS 316210, Footwear Manufacturing. Therefore, the 1,000-employee size standard for NAICS 316210, Footwear Manufacturing, has been in effect since October 1, 2012. SBA does not agree with the commenter’s assertion that SBA did not provide a detailed analysis and justification for establishing a single size standard for a group of industries at the 4-digit NAICS level as required by 15 U.S.C. 632(a)(7). That requirement only applies when SBA intends to establish a common size standard for a group of existing 6-digit NAICS codes at the 4digit NAICS Industry Group level. It does not apply to the size standard that SBA adopted for NAICS 316210, Footwear Manufacturing, the new industry that OMB created by merging multiple NAICS industries as part of its NAICS 2012 updates because the five industries have similar production processes. SBA disagrees with most of the arguments from the commenter regarding the Jobs Act and the analysis in the proposed rule. The commenter’s allegation that SBA has not held any public forums under the Jobs Act is simply not correct. To obtain public input on numerous provisions under the Jobs Act, in 2011, SBA presented its size standards methodology to businesses in 13 cities in the U.S. and sought their input. SBA also provided information on the status of the comprehensive size standards review and on how interested parties can provide SBA with input and feedback on the size standards review. SBA does not agree with the commenter’s claim that the Agency failed to explain how the 1,000employee size standard is appropriate for the footwear manufacturing industry. In the proposed rule, SBA detailed what industry and Federal contracting factors the Agency considered, how they were calculated, what data sources it examined, and how the results were translated to size standards supported by each factor. The 2012 IFR had no impact on the SBA’s September 10, 2014 proposed rule to retain the 1,000-employee based size standard for Footwear Manufacturing. As explained in the September 10, 2014 proposed rule, due to the lack of data on actual start-up costs, SBA uses average assets as a proxy for start-up PO 00000 Frm 00040 Fmt 4701 Sfmt 4700 costs. SBA calculates average assets by combining the sales to total assets ratio for an industry from the Risk Management Association’s (RMA) Annual eStatement Studies with average receipts from the Economic Census data. The 2009–2011 RMA data, the latest available when SBA prepared the proposed rule, did not contain the sales to assets ratio for the Footwear Manufacturing industries. Therefore, the average assets factor was left blank for Footwear Manufacturing. SBA measures industry competition using the four-firm concentration ratio and estimates a size standard only if its value is 40 percent or more. SBA did not have the data to compute the four-firm ratio for Footwear Manufacturing. Thus, that factor was not included in the analysis. As explained in the proposed rule as well as in SBA’s size standards methodology, SBA analyzes the size distribution of firms using the Gini coefficient. The Gini coefficient factor was included for Footwear Manufacturing. As part of its review, SBA evaluates small business participation on Federal contracting and SBA’s loan programs under both existing and proposed size standards as well. The Federal contracting factor was evaluated for every industry, including Footwear Manufacturing. The impact on loan programs was evaluated on a more general basis as the vast majority of businesses receiving SBA’s loans are well below the size standards. Aggregated impacts of proposed size standards on SBA’s financial assistance and Federal procurement were provided as part of the regulatory impact analysis of the proposed rule. It was not practical to include the results for each of the 364 industries covered by the proposed rule. SBA considers secondary factors on a case by case basis. While the commenter complained that SBA did not consider secondary factors, it did not indicate what secondary factors SBA should consider in reviewing the size standard for Footwear Manufacturing. Regarding the publication of data, SBA provided the results for every primary factor and each industry, unless the data were not available or the results were not relevant. Additionally, the majority of the data SBA used in the proposed rule are publicly available. While the commenter claimed that actual industry data support lowering the size standard for Footwear Manufacturing to below 500 employees, it did not provide any specific industry data or analysis to support its claim. The commenter’s allegation that SBA willfully and arbitrarily excluded the Federal contracting data from October 2012 is incorrect. When SBA prepared E:\FR\FM\26JAR3.SGM 26JAR3 Federal Register / Vol. 81, No. 16 / Tuesday, January 26, 2016 / Rules and Regulations the proposed rule, the latest Federal contracting data that were available was for fiscal year 2011. The commenter wrongly interpreted the 7.8 percent Federal contracting factor for Footwear Manufacturing as the small business share of Federal footwear market. As explained in the proposed rule, that value represents the difference between small business share of total industry receipts (36.2%) and small business share of total contract dollars (44.0%) for Footwear Manufacturing. SBA disagrees with the comment that the 1,000-employee size standard has allowed firms that are dominant in the footwear manufacturing industry to qualify as small. Similarly, SBA also disagrees with the argument that SBA did not perform the dominant analysis for Footwear Manufacturing. SBA examined the market share (i.e., share of total industry’s receipts) of firms that would become small under the proposed size standard in each industry and determined that no individual firm at or below the proposed size standard would be large enough to dominate its field of operation. Since it was not practical to include the market share for each of the 364 industries, SBA provided a range of values. Among the industries for which the Agency proposed to change the size standards in Manufacturing, the small business market share varied from 0.02 percent to 18.9 percent, averaging 1.7 percent. For Footwear Manufacturing, that value was 1.9 percent, suggesting that at that level market share no individual firm would be dominant under the proposed 1,000employee size standard. SBA looks at the share of total industry receipts, not Federal contract dollars, to determine if a firm is dominant in the industry. Again, SBA considers a firm to be dominant when it is dominant in the entire industry, which in this case is NAICS 316210, Footwear Manufacturing. It does not relate to a specific product line manufactured by a particular company in that industry, or a particular agency. Otherwise, the number of companies dominant in their industries, based on a specific product they manufacture, would be too numerous to identify. Furthermore, the data does not support the argument that the 1,000employee size standard has harmed the companies below 500 employees by forcing them to compete against companies with 500–1,000 employees for small business set aside procurements. The results from small business goaling data shown in Table 1, ‘‘Contract Dollars in Footwear Manufacturing by Business Size,’’ show that the share of companies below 500 employees in total contract dollars in Footwear Manufacturing related industries increased from about 31 4475 percent during fiscal years 2011–2012 (i.e., prior to the 1,000-employee size standard) to 46 percent during fiscal years 2013–2014 (i.e., after the 1,000employee size standard). More importantly, small business dollars awarded to firms below 500 employees increased from $32 million to $49 million, an increase of more than 50 percent. Similarly, the results also do not support the argument that the 1,000employee size standard has reduced Federal opportunities for firms that are above the size standard. As can be seen from the table, dollars awarded to firms above 1,000 employees have increased more than 50 percent from $18 million per year during fiscal years 2011–2012 to more than $27 million during fiscal years 2013–2014. It is not that firms between 500 and 1,000 employees that became small under the 1,000-employee size standard are getting more contracts now, thereby reducing opportunities for firms below 500 employees and those above 1,000 employees. The data shows that they continued to get those contracts, but as small businesses under the 1,000-employee size standard. In fact, firms between 500 and 1,000 employees lost some of their market share to firms below 500 employees and those above 1,000 employees under the higher size standard. TABLE 1—CONTRACT DOLLARS IN FOOTWEAR MANUFACTURING BY BUSINESS SIZE [In $ million] Business size (number of employees) Average 2011–2012 Average 2013–2014 NA ........................................................................................................................................................ 3.2 0.1 >=500 ................................................................................................................................................... >500 to >=1,000 .................................................................................................................................. >1,000 .................................................................................................................................................. Other than small total .......................................................................................................................... 0.3 45.4 18.4 67.3 0.5 5.3 27.6 33.4 3.3 31.6 1.8 0.3 36.9 1.0 48.6 23.1 0.2 72.9 6.5 31.9 47.2 18.7 104.3 1.1 49.1 28.4 27.8 106.4 Other than small business Small business NA ........................................................................................................................................................ >=500 ................................................................................................................................................... >500 to >=1,000 .................................................................................................................................. >1,000 .................................................................................................................................................. Small total ............................................................................................................................................ mstockstill on DSK4VPTVN1PROD with RULES3 Overall NA ........................................................................................................................................................ >=500 ................................................................................................................................................... >500 to >=1,000 .................................................................................................................................. >1,000 .................................................................................................................................................. Overall total .......................................................................................................................................... SBA is unable to verify the argument that one previously large business that VerDate Sep<11>2014 22:00 Jan 25, 2016 Jkt 238001 became small under the 1,000-employee size standard captured more than 28 PO 00000 Frm 00041 Fmt 4701 Sfmt 4700 percent of total small business dollars awarded under NAICS 316210 in 2014. E:\FR\FM\26JAR3.SGM 26JAR3 4476 Federal Register / Vol. 81, No. 16 / Tuesday, January 26, 2016 / Rules and Regulations Based on the analysis of contract data for Fiscal year 2014, SBA found no individual firm receiving more than 12 percent of small business dollars awarded under for NAICS 316210. Moreover, because agencies still continued to apply older footwear manufacturing NAICS codes (albeit incorrectly) for footwear contracts, the results based on NAICS 316210 alone would be misleading. Using the data for all footwear manufacturing related NAICS codes, SBA found that no individual firm accounted for more than 19 percent of small business dollars awarded in those NAICS codes for fiscal year 2014. These levels of market share do not suggest that the size standard has classified dominant firms as small. SBA disagrees with the comment that the Agency’s decision not to lower any size standards was arbitrary and capricious and violates the statute and Agency’s methodology. Although not lowering small business size standards has been SBA’s general policy to enhance small business participation in Federal programs in the current economic environment, SBA does make exceptions. For example, in a final rule (RIN 3245–AG51) published elsewhere in this Federal Register, SBA has lowered size standards for three mining industries that are not part of Manufacturing, Wholesale Trade, or Retail Trade. In the September 10, 2014 proposed rule, SBA provided a detailed analysis to explain why lowering size standards would be against the best interests of small businesses. SBA believes that businesses below 500 employees will be better off competing with companies up to 1,000 employees for small business set aside procurements than competing for unrestricted procurements against companies that have several thousand employees. Because small businesses do not have the economies of scale (automation, marketing, production, technology, etc.) that larger enterprises have, small businesses generally increase their employees, resources, and tools when they get a new contract. As a result, SBA believes that small businesses will add more to the economy by hiring people, and purchasing equipment, materials, and technology that larger businesses might already have on hand. SBA disagrees and does not see the need for creating an exception for military footwear manufacturing. According to the information provided by the commenter, there exist numerous firms that are already in compliance with the Berry Amendment. SBA is not convinced with the rationale why a lower size standard is warranted to comply with contracts with certain requirements. The Berry Amendment requires DoD to give preference in procurement to domestically produced, manufactured, or home-grown products, most notably food, clothing, fabrics, and specialty metals. Normally, one would expect special manufacturing requirements to point to the need for a larger size standard, not lower. In addition, the available industry data does not support a 500-employee size standard for Footwear Manufacturing, especially for military footwear manufacturing. Firms serving the military footwear market are, on average, considerably larger than the rest of the firms in the industry. Thus, it would be inconsistent to have a lower size standard for the military footwear market and a higher standard for the rest of the industry. Furthermore, compliance with the Berry Amendment is not a function of the size of the business performing a contract. Rather, it is a function of the origin of the products, which small businesses can certainly manufacture. Moreover, there are several small footwear manufacturers that manufacture footwear that is compliant with the Berry Amendment. Most importantly, SBA is concerned that lowering the size standard would reduce the pool of small businesses that are available to meet the DLA/DoD requirements under small business procurements for military footwear. This would cause the Government to procure its needs through more full and open competition, thereby forcing smaller firms, including those between 500 employees and 1,000 employees, to compete with firms many times their size. In response to the comments, SBA updated the Federal contracting factor for Footwear Manufacturing using FPDS–NG data for fiscal years 2013– 2014. It should be noted that the Federal contracting factor is calculated based on the 1,000-employee size standard for NAICS 316210. Following OMB’s merging of five footwear manufacturing industries to one industry, RMA’s eStatement Studies started publishing the sales to total assets ratio for the new industry (NAICS 316210). Accordingly, using that data for years 2012–2014, SBA is now also able to calculate the average assets factor for NAICS 316210, which was not included in the proposed rule. The updated results are shown in Table 2 ‘‘Updated Size Standards Analysis for Footwear Manufacturing (No. of Employees),’’ below. As can be seen from the table, the updated results reconfirm the 1,000-employee size standard for NAICS 316210, Footwear Manufacturing. TABLE 2—UPDATED SIZE STANDARDS ANALYSIS FOR FOOTWEAR MANUFACTURING [Number of Employees] Simple average firm size (number of employees) Weighted average firm size (number of employees) Average assets size ($ million) 55 500 550 1,500 3.7 500 Factor ............................... Size standard ................... Four-firm ratio (%) Four-firm average size (number of employees)* .................... .................... NA NA Gini coefficient 0.827 1,500 Federal contract factor (%) 3.8 1,000 Calculated size standard (number of employees) 1,000 mstockstill on DSK4VPTVN1PROD with RULES3 *Size standard for four-firm average size is not calculated because there is no data to compute the four-firm ratio. Therefore, based on the analyses of all supportive and opposing comments on the proposed rule and latest industry and contracting data available when this final rule was prepared, SBA is retaining the 1,000-employee size VerDate Sep<11>2014 22:00 Jan 25, 2016 Jkt 238001 standard for Footwear Manufacturing (NAICS 316210), as proposed. Comments on Subsector 315, Apparel Manufacturing SBA received four comments on size standards for industries within NAICS Subsector 315, Apparel Manufacturing. PO 00000 Frm 00042 Fmt 4701 Sfmt 4700 SBA proposed to increase the size standard for seven industries in that subsector from 500 employees to 750 employees. A commenter supported proposed increases to size standards for the apparel manufacturing industries from E:\FR\FM\26JAR3.SGM 26JAR3 mstockstill on DSK4VPTVN1PROD with RULES3 Federal Register / Vol. 81, No. 16 / Tuesday, January 26, 2016 / Rules and Regulations 500 employees to 750 employees. The commenter argued that the current 500employee size standard has been a major deterrent in its ability to hire and retain employees to meet unexpected surges in demand of clothing items by DLA from small businesses, especially in times of war. Higher size standards are important for small clothing manufacturers to remain eligible to compete for small business set aside purchases by DoD and DLA, the commenter observed. The commenter pointed out that, because these industries are labor intensive, higher size standards will offer small businesses greater opportunities to hire more people in different areas of the country. A labor organization also supported proposed increases to size standards for NAICS codes 315210 (Cut and Sew Apparel Contractors), 315220 (Men’s and Boys’ Cut and Sew Apparel Manufacturing), 315240 (Women’s, Girls’, and Infants’ Cut and Sew Apparel Manufacturing), and 315280 (Other Cut and Sew Apparel Manufacturing) from 500 employees to 750 employees. These NAICS codes apply to procurement of military apparel by DoD and DLA to support U.S. troops, and the current 500-employee size standard has made it difficult for small business apparel contractors to meet demands during surges in troop support acquisitions (also referred to as surge capability), the commenter maintained. The 500employee size standard has created persistent capacity and price problems for small businesses, the commenter added. The organization stated that small apparel contractors find themselves torn between the need to maintain the surge capabilities expected by the DLA and the need to maintain the small business status necessary to compete for DLA uniform contracts. Therefore, the 750-employee size standard will allow small apparel and clothing contractors to expand production temporarily when demand surges without jeopardizing their small business status, the commenter maintained. The capability to meet unexpected surges in demand for items such as uniforms and body armor is critical to maintaining warfighter readiness, the organization noted. Citing a May 2013 survey of DLA’s clothing and apparel contractors, the organization stated that 90 percent of respondents were dependent on DoD contracts for their financial viability. An Alaska Native Corporation representative opposed the proposed 750-employee size standard for Subsector 315, Apparel Manufacturing. The Corporation owns several small VerDate Sep<11>2014 22:00 Jan 25, 2016 Jkt 238001 disadvantaged businesses in the apparel manufacturing industry, the commenter observed. The commenter argued that raising the size standard would negatively affect the growth of their company and profits of their shareholders. Raising size standards would make a greater number of large companies eligible for small business status, thereby increasing competition in the apparel manufacturing market and reducing opportunities for their company and other small businesses, the commenter explained. This would be detrimental in light of decreases in Federal government spending in the apparel manufacturing market over the last 5 years because there would be more companies bidding on fewer contracts and fewer opportunities for true small businesses, the commenter concluded. Another commenter recommended a 250-employee size standard for several industries within Subsector 315, namely NAICS 315210 (Cut and Sew Apparel Contractors), 315220 (Men’s and Boys’ Cut and Sew Apparel Manufacturing), 315240 (Women’s, Girls’, and Infants’ Cut and Sew Apparel Manufacturing), 315280 (Other Cut and Sew Apparel Manufacturing), and 315990 (Apparel Accessories and Other Apparel Manufacturing). The commenter argued that the 250-employee size standard would offer protection for emerging small businesses, given the fragility of the clothing and textile industry. However, the commenter provided no data or analysis to support the argument. SBA’s Response Based on its analysis of industry and Federal procurement data and public comments, SBA has determined that it will adopt the 750-employee size standard for the seven industries in Subsector 315, Apparel Manufacturing, as proposed. In recent years, DLA has strived to increase its awards for procuring military clothing through small businesses. This has put strains on many small businesses, according to the commenters, to meet DLA’s expected surge capabilities while maintaining their small business size status. The increase from 500 employees to 750 employees will allow a number of small businesses to take on these contracts and to hire more workers without jeopardizing their eligibility. Based on data from the Economic Census and System of Award Management (SAM), only about 10 additional businesses that are primarily involved in Apparel Manufacturing will qualify as small under the 750-employee size standard. SBA does not believe that PO 00000 Frm 00043 Fmt 4701 Sfmt 4700 4477 the higher size standard will cause a significant negative impact on existing small businesses. Therefore, SBA is adopting the 750-employee size standard for all industries in NAICS Subsector 315, Apparel Manufacturing. Comments on NAICS 327993, Mineral Wool Manufacturing A comment from a trade association for manufacturers of fiber glass and rock and slag wool insulation addressed the size standard for NAICS 327993, Mineral Wool Manufacturing. Specifically, the association supported SBA’s proposal to increase the size standard for NAICS 327993 from 750 employees to 1,500 employees. SBA’s Response Because there were no comments opposed to this increase, SBA is adopting the 1,500 employee size standard for NAICS 327993, as proposed. Comments on NAICS 336412, Aircraft Engine and Engine Parts Manufacturing; and NAICS 336413, Other Aircraft Part and Auxiliary Equipment Manufacturing SBA proposed increasing the size standards for NAICS 336412 from 1,000 employees to 1,500 employees and for NAICS 336413 from 1,000 employees to 1,250 employees. A military aircraft parts and auxiliary equipment manufacturer supported the proposed increases to size standards for both industries, but recommends that SBA adopt the same 1,500-employee size standard for NAICS 336413 as well, instead of the proposed 1,250-employee size standard. The commenter argued that the differences in manufacturing engine parts and other aircraft equipment are minimal. The single size standard for both industries would provide uniform employee levels for small business eligibility and offer them more flexibility to adjust to the requirements of the marketplace, the commenter explained. SBA’s Response SBA has not adopted the recommendation for three reasons. First, although product lines and production methods may be related, there exist significant differences in industry characteristics between the two industries. For example, based on the 2007 Economic Census, the average size of firms is 230 employees for NAICS 336412 as compared to 146 employees for NAICS 336413. Similarly, average assets size is about $74 million for NAICS 336412 as opposed to only $26 million for NAICS 336413. Second, the E:\FR\FM\26JAR3.SGM 26JAR3 4478 Federal Register / Vol. 81, No. 16 / Tuesday, January 26, 2016 / Rules and Regulations size standards for aircraft, aircraft parts and equipment related exceptions to NAICS 541712 (Research and Development in the Physical, Engineering and Life Sciences (except Biotechnology)) are tied to size standards for industries within NAICS Industry Group 3364 (Aerospace Product and Parts Manufacturing). Therefore, changing size standards for any of the industries in NAICS Industry Group 3364 would also require changing the size standards for exceptions under NAICS 541712. Third, the National Defense Authorization Act of fiscal year 2013 (NDAA 2013) limits establishing a single or common size standard for multiple industries without proper justification and without publishing such a size standard for public comments. Obviously, given the industry data that support different size standards for the two industries, it would be difficult to justify the single size standard for them in accordance with NDAA 2013. As part of its quinquennial review of all size standards required by the Jobs Act, SBA will reevaluate the size standards for those industries in the coming years and consider the recommendation at that time. For the above reasons, in this final rule, SBA is adopting the 1,500employee size standard for NAICS 336412 and the 1,250-employee size standard for NAICS 336413, as proposed. mstockstill on DSK4VPTVN1PROD with RULES3 Comments on NAICS 611512, Flight Training A commenter supported increasing size standards for NAICS Sector 31–33 manufacturing, specifically increasing the size standard for NAICS 336413 from 1,000 employees to 1,250 employees. The commenter, operating primarily in NAICS 611512 (Flight Training), advocated for the creation of a separate manufacturing NAICS code for ‘‘Military Defense Training’’ with a size standard of 1,500 employees. Contracting Officers have recently been utilizing NAICS 336413 for solicitations for services contracts involving military training due to its higher size standard and technical nature of military training, the commenter explained. NAICS 611512 and its $27.5 million receipts based size standard do not reflect the requirements for military defense training, the commenter added. The commenter argued that flight training can more realistically be categorized under NAICS Sector 31–33 (Manufacturing) rather than under Sector 61 (Education). VerDate Sep<11>2014 22:00 Jan 25, 2016 Jkt 238001 SBA’s Response SBA cannot make the suggested change for several reasons. First, the September 10, 2014 proposed rule and this final rule only apply to industries in NAICS Sector 31–33, Manufacturing. The September 10, 2014 proposed rule did not address NAICS 611512, Flight Training. SBA evaluated NAICS 611512 and its size standard in a proposed rule (76 FR 70667 (November 15, 2011)) that was part of its comprehensive review of Sector 61, Educational Services. In the final rule, SBA determined that data did not support an increase in the size standard for NAICS 611512. The final rule (77 FR 58739 (September 24, 2012)) fully explains and justifies how SBA arrived at its determination that the then existing $25.5 million size standard for NAICS 611512 should remain unchanged. It was increased for inflation to $27.5 million, effective July 14, 2014, along with increases to all other monetary based size standards (79 FR 33647 (June 12, 2014)). Second, SBA has no authority or expertise to create new NAICS codes or modify existing ones. Creating or modifying NAICS industry definitions or codes is done through the U.S. Economic Classification Policy Committee under the Office of Management and Budget (OMB) in cooperation with statistical agencies from the U.S., Canada, and Mexico. If the commenter believes that a new NAICS code is warranted for military flight training, it should approach OMB (see http://www.census.gov/eos/www/ naics/). Every five years, OMB updates NAICS codes and definitions, the next being the NAICS 2017 updates. For Federal procurement, the contracting officer must specify the NAICS code and size standard in accordance with the principal purpose of the procurement (13 CFR 121.402(b)). When the government purchases manufactured products, the contracting officer must assign the appropriate NAICS code and size standard from Sector 31–33. There may be ancillary services that accompany the manufactured product, but if the principal purpose of the procurement action is to purchase product, then the NAICS code and small business size standard are from the manufacturing sector. If a service is the primary purpose of the procurement, it should be classified under the appropriate services NAICS code and size standard. When the government procures both products and services, it must determine which is the greater part of the contract, and must assign the appropriate NAICS code and size PO 00000 Frm 00044 Fmt 4701 Sfmt 4700 standard (13 CFR 121.402(b)). Any interested party adversely affected by a contracting officer’s NAICS code designation may appeal that designation to SBA’s Office of Hearings and Appeals (OHA) (see 13 CFR 121.1101–1103). Comments on NAICS 321212, Softwood Veneer and Plywood Manufacturing A commenter opposed SBA’s proposal to increase the size standard for Softwood Veneer and Plywood Manufacturing (NAICS 321212) from 500 employees to 1,250 employees. The commenter maintained that the increase would have an impact on the majority of manufacturers in this industry by affecting the availability of Federal timber, because it would increase the competition for the timber sale set aside for small businesses in this industry by enlarging the pool of eligible small business manufacturers. The commenter argued that the proposed size standard increase is not warranted because companies that qualify as small under the current size standard already exist. The commenter was concerned that by allowing larger companies to qualify as small the proposed increase to the size standard for NAICS 321212 would negatively impact a number of companies that have made business decisions to remain below the 500employee size standard to benefit from the SBA’s timber set-aside program. With the proposed 1,250-employee size standard, the plywood and veneer manufacturers below 500 employees would lose the protection provided by the program, the commenter concluded. SBA’s Response With respect to the argument that an increase to the size standard for NAICS 321212 or any other wood product manufacturing industry would negatively impact firms participating in the SBA’s Commercial Timber Sale SetAside Program, the wood manufacturing industry size standards do not apply to determine eligibility for purposes of that program. Rather, the size standard for the timber sale set-aside program (except for salvage timber) is 500 employees (see 13 CFR 121.507), which SBA did not propose to increase. The arguments that there are already small businesses under the existing size standard, that firms have made business decisions to remain small to benefit from the program, and that they would lose small business protection if additional firms qualify as small, are not valid reasons for not revising the size standard when the relevant industry data warrants doing so. Of the 14 industries in NAICS Subsector 321, Wood Product Manufacturing, based on E:\FR\FM\26JAR3.SGM 26JAR3 Federal Register / Vol. 81, No. 16 / Tuesday, January 26, 2016 / Rules and Regulations mstockstill on DSK4VPTVN1PROD with RULES3 the results of the evaluation of industry characteristics (such as average firm size, industry concentration, and distribution of firms by size) and the Federal contracting factor, SBA proposed increasing the size standards for NAICS 321212 and four others, and retaining the current 500-employee size standard for nine industries. As can be seen from the results in Table 3 of the September 10, 2014 proposed rule, the industries for which SBA proposed increasing the size standards had significantly higher average firm size, four-firm concentration ratio and Gini coefficient than others. To still maintain their size standard at the 500-employee level would be inconsistent with SBA’s mandate to adjust size standards based on current industry and market data. Moreover, based on the Economic Census and SAM data for NAICS 321212, only about five additional firms will qualify as small under the 1,250employee size standard, suggesting that the higher size standard will have very minimal impact on businesses below the current 500-employee size standard. For these reasons, SBA is adopting the 1,250-employee size standard for NAICS 321212, as proposed. Similarly, SBA is adopting proposed size standards increases for four other industries in Subsector 321. Other Comments Two commenters offered general assessments of SBA’s proposed rule. Both supported SBA’s proposed five employee based size standard levels for Manufacturing and their incremental increases of 250 employees rather than 500 employees; however, one suggested that SBA should incorporate the sixth level at 250 employees and set the maximum employee based standard at 1,000 employees. A lower size standard would protect emerging manufacturers that are not able to compete with established larger businesses, the commenter explained. One opposed proposed increases to size standards in Manufacturing arguing that higher size standards would allow manufacturers to create less productive, low paying jobs, while the other commenter supported the increases except for industries in Subsector 315 for which the commenter suggested a lower 250-employee size standard. Both commenters argued that the Agency should lower size standards when the analysis supports lowering them. One argued that not lowering size VerDate Sep<11>2014 22:00 Jan 25, 2016 Jkt 238001 standards would encourage manufacturers not to upgrade their facilities with advanced manufacturing techniques and allow larger manufacturers to compete with true small manufacturers. While one commenter suggested that SBA should not adjust employee based size standards for labor productivity growth and focus on protecting emerging businesses instead, the other pointed out that the lack of data on labor productivity would make adjusting size standards based on labor productivity difficult. One commenter supported weighing all factors equally, while the other suggested weighing some factors more than others for certain industries. In addition to employee counts, the second commenter suggested other criteria for establishing size standards, including business tenure (5 years), subcontracting limitations, revenue limits ($30 million), and net worth limits ($5 million). Lastly, both commenters endorsed SBA’s approach to use a single value as a size standard as opposed to a range of values. SBA’s Response Some of the issues the commenters have raised (such as lowering minimum and maximum size standards, using different factors and weighing them differently from others, lowering size standards, etc.) will be addressed when SBA updates its ‘‘Size Standards Methodology’’ for the next round of size standards review. With respect to SBA’s policy of not lowering size standards when the data support doing so, SBA provided a detailed explanation in the proposed rule with respect to why lowering size standards is not in the best interest of small businesses in the current economic climate. SBA is concerned that lowering maximum and minimum levels of size standards would cause untold numbers of small businesses to lose their eligibility for Federal programs. Incorporation of net worth into SBA’s table of size standards is not practicable. It is not a value that lends itself to comparing businesses in a particular industry. A company’s net worth can be affected by a number of things, such as debt, repurchased corporate stock, etc. Furthermore, data on net worth is not available by industry. Other criteria proposed by the commenter would, SBA believes, be too nebulous, temporary, and subjective and therefore not useful when establishing PO 00000 Frm 00045 Fmt 4701 Sfmt 4700 4479 size standards that usually must remain static and in place for a number of years. Establishing small business eligibility based on multiple criteria (such as revenue limit, net worth limit, and employee count), as suggested by the commenter, would create unnecessary complexity and confusion in size standards. NAICS 326211, Tire Manufacturing (Except Retreading) In the September 10, 2014 proposed rule, SBA proposed amending Footnote 5 to the table of size standards relating to NAICS 326211, Tire Manufacturing (except Retreading). In the absence of comments opposing the proposed amendment, SBA is amending Footnote 5, as proposed, by replacing the former Census classification codes 30111 and 30112 with the new Census Product Classification Codes 3262111 and 3262113 respectively. Conclusions Based on the analyses of the latest industry and Federal contracting data available and thorough evaluation of all public comments on the proposed rule, SBA is adopting all size standards changes in NAICS Sector 31–33, Manufacturing, as proposed. Specifically, SBA is increasing size standards for 209 industries in NAICS Sector 31–33. These industries, along with their current and revised size standards are shown in Table 3 ‘‘Summary of Size Standards Revisions in NAICS Sector 31–33.’’ SBA is also increasing the refining capacity component of the size standard for NAICS 324110 (Petroleum Refiners) from 125,000 barrels per calendar day (BPCD) to 200,000 BPCD for businesses that are primarily engaged in petroleum refining and eliminating the requirement that 90 percent of the output to be delivered be refined by the successful bidder from either crude oil or bona fide feedstocks. To qualify under the capacity size standard, the firm, together with its affiliates, must be primarily engaged in refining crude petroleum into refined petroleum products. To reflect these changes, SBA is also amending Footnote 4 of SBA’s table of size standards. Finally, the Agency is also updating Footnote 5 to NAICS 326211 to reflect the current Census Product Classification Codes 3262111 and 3262113. E:\FR\FM\26JAR3.SGM 26JAR3 4480 Federal Register / Vol. 81, No. 16 / Tuesday, January 26, 2016 / Rules and Regulations TABLE 3—SUMMARY OF SIZE STANDARDS REVISIONS IN NAICS SECTOR 31–33 mstockstill on DSK4VPTVN1PROD with RULES3 NAICs code 311111 311211 311221 311314 311340 311351 311352 311411 311412 311421 311422 311423 311511 311512 311513 311514 311520 311611 311612 311613 311615 311710 311812 311813 311821 311824 311830 311911 311919 311920 311930 311941 312111 312112 312113 312120 312130 312140 312230 313110 313230 314110 314120 315110 315190 315210 315220 315240 315280 316992 321212 321213 321219 321911 321991 322121 322130 322211 322219 322220 322230 322291 323117 324191 325194 325199 325211 325312 325320 ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ VerDate Sep<11>2014 Current size standard (number of employees) NAICS U.S. industry title Dog and Cat Food Manufacturing ................................................................................................. Flour Milling .................................................................................................................................... Wet Corn Milling ............................................................................................................................. Cane Sugar Manufacturing ............................................................................................................ Nonchocolate Confectionery Manufacturing .................................................................................. Chocolate and Confectionery Manufacturing from Cacao Beans ................................................. Confectionery Manufacturing from Purchased Chocolate ............................................................. Frozen Fruit, Juice, and Vegetable Manufacturing ........................................................................ Frozen Specialty Food Manufacturing ........................................................................................... Fruit and Vegetable Canning ......................................................................................................... Specialty Canning .......................................................................................................................... Dried and Dehydrated Food Manufacturing .................................................................................. Fluid Milk Manufacturing ................................................................................................................ Creamery Butter Manufacturing ..................................................................................................... Cheese Manufacturing ................................................................................................................... Dry, Condensed, and Evaporated Dairy Product Manufacturing .................................................. Ice Cream and Frozen Dessert Manufacturing ............................................................................. Animal (except Poultry) Slaughtering ............................................................................................ Meat Processed from Carcasses ................................................................................................... Rendering and Meat Byproduct Processing .................................................................................. Poultry Processing ......................................................................................................................... Seafood Product Preparation and Packaging ............................................................................... Commercial Bakeries ..................................................................................................................... Frozen Cakes, Pies, and Other Pastries Manufacturing ............................................................... Cookie and Cracker Manufacturing ............................................................................................... Dry Pasta, Dough, and Flour Mixes Manufacturing from Purchased Flour .................................. Tortilla Manufacturing ..................................................................................................................... Roasted Nuts and Peanut Butter Manufacturing ........................................................................... Other Snack Food Manufacturing .................................................................................................. Coffee and Tea Manufacturing ...................................................................................................... Flavoring Syrup and Concentrate Manufacturing .......................................................................... Mayonnaise, Dressing, and Other Prepared Sauce Manufacturing .............................................. Soft Drink Manufacturing ............................................................................................................... Bottled Water Manufacturing ......................................................................................................... Ice Manufacturing ........................................................................................................................... Breweries ....................................................................................................................................... Wineries ......................................................................................................................................... Distilleries ....................................................................................................................................... Tobacco Manufacturing .................................................................................................................. Fiber, Yarn, and Thread Mills ........................................................................................................ Nonwoven Fabric Mills ................................................................................................................... Carpet and Rug Mills ..................................................................................................................... Curtain and Linen Mills .................................................................................................................. Hosiery and Sock Mills .................................................................................................................. Other Apparel Knitting Mills ........................................................................................................... Cut and Sew Apparel Contractors ................................................................................................. Men’s and Boys’ Cut and Sew Apparel Manufacturing ................................................................. Women’s, Girls’, and Infants’ Cut and Sew Apparel Manufacturing ............................................. Other Cut and Sew Apparel Manufacturing ................................................................................... Women’s Handbag and Purse Manufacturing ............................................................................... Softwood Veneer and Plywood Manufacturing .............................................................................. Engineered Wood Member (except Truss) Manufacturing ............................................................ Reconstituted Wood Product Manufacturing ................................................................................. Wood Window and Door Manufacturing ........................................................................................ Manufactured Home (Mobile Home) Manufacturing ...................................................................... Paper (except Newsprint) Mills ...................................................................................................... Paperboard Mills ............................................................................................................................ Corrugated and Solid Fiber Box Manufacturing ............................................................................ Other Paperboard Container Manufacturing .................................................................................. Paper Bag and Coated and Treated Paper Manufacturing ........................................................... Stationery Product Manufacturing .................................................................................................. Sanitary Paper Product Manufacturing .......................................................................................... Books Printing ................................................................................................................................ Petroleum Lubricating Oil and Grease Manufacturing .................................................................. Cyclic Crude, Intermediate, and Gum and Wood Chemical Manufacturing ................................. All Other Basic Organic Chemical Manufacturing ......................................................................... Plastics Material and Resin Manufacturing ................................................................................... Phosphatic Fertilizer Manufacturing ............................................................................................... Pesticide and Other Agricultural Chemical Manufacturing ............................................................ 22:00 Jan 25, 2016 Jkt 238001 PO 00000 Frm 00046 Fmt 4701 Sfmt 4700 E:\FR\FM\26JAR3.SGM 26JAR3 500 500 750 750 500 500 500 500 500 500 1,000 500 500 500 500 500 500 500 500 500 500 500 500 500 750 500 500 500 500 500 500 500 500 500 500 500 500 750 1,000 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 750 750 500 750 500 500 500 500 500 750 1,000 750 500 500 Revised size standard (number of employees) 1,000 1,000 1,250 1,000 1,000 1,250 1,000 1,000 1,250 1,000 1,250 750 1,000 750 1,250 750 1,000 1,000 1,000 750 1,250 750 1,000 750 1,250 750 1,250 750 1,250 750 1,000 750 1,250 1,000 750 1,250 1,000 1,000 1,500 1,250 750 1,500 750 750 750 750 750 750 750 750 1,250 750 750 1,000 1,250 1,250 1,250 1,250 1,000 750 750 1,500 1,250 750 1,250 1,250 1,250 750 1,000 Federal Register / Vol. 81, No. 16 / Tuesday, January 26, 2016 / Rules and Regulations 4481 TABLE 3—SUMMARY OF SIZE STANDARDS REVISIONS IN NAICS SECTOR 31–33—Continued NAICs code mstockstill on DSK4VPTVN1PROD with RULES3 325411 325412 325413 325414 325510 325611 325612 325613 325620 325992 326111 326112 326113 326122 326140 326150 326160 326191 326211 326220 326291 327110 327212 327213 327215 327310 327332 327410 327420 327910 327993 331110 331315 331511 331512 332111 332112 332215 332216 332311 332313 332321 332410 332420 332431 332510 332911 332912 332913 332919 332991 332992 333111 333112 333120 333132 333242 333244 333415 ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ 333611 333612 333613 333618 333911 333912 333913 333921 333923 ........ ........ ........ ........ ........ ........ ........ ........ ........ VerDate Sep<11>2014 Current size standard (number of employees) NAICS U.S. industry title Medicinal and Botanical Manufacturing ......................................................................................... Pharmaceutical Preparation Manufacturing ................................................................................... In-Vitro Diagnostic Substance Manufacturing ................................................................................ Biological Product (except Diagnostic) Manufacturing .................................................................. Paint and Coating Manufacturing .................................................................................................. Soap and Other Detergent Manufacturing ..................................................................................... Polish and Other Sanitation Good Manufacturing ......................................................................... Surface Active Agent Manufacturing ............................................................................................. Toilet Preparation Manufacturing ................................................................................................... Photographic Film, Paper, Plate, and Chemical Manufacturing .................................................... Plastics Bag and Pouch Manufacturing ......................................................................................... Plastics Packaging Film and Sheet (including Laminated) Manufacturing ................................... Unlaminated Plastics Film and Sheet (except Packaging) Manufacturing .................................... Plastics Pipe and Pipe Fitting Manufacturing ................................................................................ Polystyrene Foam Product Manufacturing ..................................................................................... Urethane and Other Foam Product (except Polystyrene) Manufacturing ..................................... Plastics Bottle Manufacturing ......................................................................................................... Plastics Plumbing Fixture Manufacturing ....................................................................................... Tire Manufacturing (except Retreading) ........................................................................................ Rubber and Plastics Hoses and Belting Manufacturing ................................................................ Rubber Product Manufacturing for Mechanical Use ...................................................................... Pottery, Ceramics, and Plumbing Fixture Manufacturing .............................................................. Other Pressed and Blown Glass and Glassware Manufacturing .................................................. Glass Container Manufacturing ..................................................................................................... Glass Product Manufacturing Made of Purchased Glass ............................................................. Cement Manufacturing ................................................................................................................... Concrete Pipe Manufacturing ........................................................................................................ Lime Manufacturing ........................................................................................................................ Gypsum Product Manufacturing .................................................................................................... Abrasive Product Manufacturing .................................................................................................... Mineral Wool Manufacturing .......................................................................................................... Iron and Steel Mills and Ferroalloy Manufacturing ........................................................................ Aluminum Sheet, Plate, and Foil Manufacturing ........................................................................... Iron Foundries ................................................................................................................................ Steel Investment Foundries ........................................................................................................... Iron and Steel Forging ................................................................................................................... Nonferrous Forging ........................................................................................................................ Metal Kitchen Cookware, Utensil, Cutlery, and Flatware (except Precious) Manufacturing ......... Saw Blade and Handtool Manufacturing ....................................................................................... Prefabricated Metal Building and Component Manufacturing ....................................................... Plate Work Manufacturing .............................................................................................................. Metal Window and Door Manufacturing ........................................................................................ Power Boiler and Heat Exchanger Manufacturing ........................................................................ Metal Tank (Heavy Gauge) Manufacturing .................................................................................... Metal Can Manufacturing ............................................................................................................... Hardware Manufacturing ................................................................................................................ Industrial Valve Manufacturing ....................................................................................................... Fluid Power Valve and Hose Fitting Manufacturing ...................................................................... Plumbing Fixture Fitting and Trim Manufacturing .......................................................................... Other Metal Valve and Pipe Fitting Manufacturing ........................................................................ Ball and Roller Bearing Manufacturing .......................................................................................... Small Arms Ammunition Manufacturing ......................................................................................... Farm Machinery and Equipment Manufacturing ............................................................................ Lawn and Garden Tractor and Home Lawn and Garden Equipment Manufacturing ................... Construction Machinery Manufacturing ......................................................................................... Oil and Gas Field Machinery and Equipment Manufacturing ........................................................ Semiconductor Machinery Manufacturing ...................................................................................... Printing Machinery and Equipment Manufacturing ........................................................................ Air-Conditioning and Warm Air Heating Equipment and Commercial and Industrial Refrigeration Equipment Manufacturing. Turbine and Turbine Generator Set Units Manufacturing ............................................................. Speed Changer, Industrial High-Speed Drive, and Gear Manufacturing ...................................... Mechanical Power Transmission Equipment Manufacturing ......................................................... Other Engine Equipment Manufacturing ........................................................................................ Pump and Pumping Equipment Manufacturing ............................................................................. Air and Gas Compressor Manufacturing ....................................................................................... Measuring and Dispensing Pump Manufacturing .......................................................................... Elevator and Moving Stairway Manufacturing ............................................................................... Overhead Traveling Crane, Hoist, and Monorail System Manufacturing ...................................... 22:00 Jan 25, 2016 Jkt 238001 PO 00000 Frm 00047 Fmt 4701 Sfmt 4700 E:\FR\FM\26JAR3.SGM 26JAR3 Revised size standard (number of employees) 750 750 500 500 500 750 500 500 500 500 500 500 500 500 500 500 500 500 1,000 500 500 750 750 750 500 750 500 500 1,000 500 750 1,000 750 500 500 500 500 500 500 500 500 500 500 500 1,000 500 500 500 500 500 750 1,000 500 500 750 500 500 500 750 1,000 1,250 1,250 1,250 1,000 1,000 750 750 1,250 1,500 750 1,000 750 750 1,000 750 1,250 750 1,500 750 750 1,000 1,250 1,250 1,000 1,000 750 750 1,500 750 1,500 1,500 1,250 1,000 1,000 750 750 750 750 750 750 750 750 750 1,500 750 750 1,000 1,000 750 1,250 1,250 1,250 1,500 1,250 1,250 1,500 750 1,250 1,000 500 500 1,000 500 500 500 500 500 1,500 750 750 1,500 750 1,000 750 1,000 1,250 4482 Federal Register / Vol. 81, No. 16 / Tuesday, January 26, 2016 / Rules and Regulations TABLE 3—SUMMARY OF SIZE STANDARDS REVISIONS IN NAICS SECTOR 31–33—Continued NAICs code 333992 333995 333996 334111 334112 334210 334220 334412 334413 334417 334418 334510 334511 ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ mstockstill on DSK4VPTVN1PROD with RULES3 334513 ........ 334514 334515 334516 334517 334614 335110 335121 335210 335221 335222 335224 335228 335312 335313 335911 335932 336111 336112 336120 336212 336213 336214 336310 336320 336330 336340 336350 336360 336370 336390 336412 336413 336414 336415 336510 336611 336612 336991 336992 336999 337110 337121 337122 337124 337125 337211 337214 337910 337920 339112 339113 339114 339115 ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ VerDate Sep<11>2014 Current size standard (number of employees) NAICS U.S. industry title Welding and Soldering Equipment Manufacturing ........................................................................ Fluid Power Cylinder and Actuator Manufacturing ........................................................................ Fluid Power Pump and Motor Manufacturing ................................................................................ Electronic Computer Manufacturing ............................................................................................... Computer Storage Device Manufacturing ...................................................................................... Telephone Apparatus Manufacturing ............................................................................................. Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing ... Bare Printed Circuit Board Manufacturing ..................................................................................... Semiconductor and Related Device Manufacturing ...................................................................... Electronic Connector Manufacturing .............................................................................................. Printed Circuit Assembly (Electronic Assembly) Manufacturing .................................................... Electromedical and Electrotherapeutic Apparatus Manufacturing ................................................. Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing. Instruments and Related Products Manufacturing for Measuring, Displaying, and Controlling Industrial Process Variables. Totalizing Fluid Meter and Counting Device Manufacturing .......................................................... Instrument Manufacturing for Measuring and Testing Electricity and Electrical Signals .............. Analytical Laboratory Instrument Manufacturing ........................................................................... Irradiation Apparatus Manufacturing .............................................................................................. Software and Other Prerecorded Compact Disc, Tape, and Record Reproducing ...................... Electric Lamp Bulb and Part Manufacturing .................................................................................. Residential Electric Lighting Fixture Manufacturing ....................................................................... Small Electrical Appliance Manufacturing ...................................................................................... Household Cooking Appliance Manufacturing ............................................................................... Household Refrigerator and Home Freezer Manufacturing .......................................................... Household Laundry Equipment Manufacturing .............................................................................. Other Major Household Appliance Manufacturing ......................................................................... Motor and Generator Manufacturing .............................................................................................. Switchgear and Switchboard Apparatus Manufacturing ................................................................ Storage Battery Manufacturing ...................................................................................................... Noncurrent-Carrying Wiring Device Manufacturing ....................................................................... Automobile Manufacturing ............................................................................................................. Light Truck and Utility Vehicle Manufacturing ............................................................................... Heavy Duty Truck Manufacturing .................................................................................................. Truck Trailer Manufacturing ........................................................................................................... Motor Home Manufacturing ........................................................................................................... Travel Trailer and Camper Manufacturing ..................................................................................... Motor Vehicle Gasoline Engine and Engine Parts Manufacturing ................................................ Motor Vehicle Electrical and Electronic Equipment Manufacturing ............................................... Motor Vehicle Steering and Suspension Components (except Spring) Manufacturing ................ Motor Vehicle Brake System Manufacturing ................................................................................. Motor Vehicle Transmission and Power Train Parts Manufacturing ............................................. Motor Vehicle Seating and Interior Trim Manufacturing ................................................................ Motor Vehicle Metal Stamping ....................................................................................................... Other Motor Vehicle Parts Manufacturing ..................................................................................... Aircraft Engine and Engine Parts Manufacturing .......................................................................... Other Aircraft Parts and Auxiliary Equipment Manufacturing ........................................................ Guided Missile and Space Vehicle Manufacturing ........................................................................ Guided Missile and Space Vehicle Propulsion Unit and Propulsion Unit Parts Manufacturing .... Railroad Rolling Stock Manufacturing ............................................................................................ Ship Building and Repairing .......................................................................................................... Boat Building .................................................................................................................................. Motorcycle, Bicycle, and Parts Manufacturing ............................................................................... Military Armored Vehicle, Tank, and Tank Component Manufacturing ......................................... All Other Transportation Equipment Manufacturing ...................................................................... Wood Kitchen Cabinet and Countertop Manufacturing ................................................................. Upholstered Household Furniture Manufacturing .......................................................................... Nonupholstered Wood Household Furniture Manufacturing ......................................................... Metal Household Furniture Manufacturing ..................................................................................... Household Furniture (except Wood and Metal) Manufacturing ..................................................... Wood Office Furniture Manufacturing ............................................................................................ Office Furniture (except Wood) Manufacturing .............................................................................. Mattress Manufacturing .................................................................................................................. Blind and Shade Manufacturing ..................................................................................................... Surgical and Medical Instrument Manufacturing ........................................................................... Surgical Appliance and Supplies Manufacturing ........................................................................... Dental Equipment and Supplies Manufacturing ............................................................................ Ophthalmic Goods Manufacturing ................................................................................................. 22:00 Jan 25, 2016 Jkt 238001 PO 00000 Frm 00048 Fmt 4701 Sfmt 4700 E:\FR\FM\26JAR3.SGM 26JAR3 Revised size standard (number of employees) 500 500 500 1,000 1,000 1,000 750 500 500 500 500 500 750 1,250 750 1,250 1,250 1,250 1,250 1,250 750 1,250 1,000 750 1,250 1,250 500 750 500 500 500 500 750 1,000 500 750 750 1,000 1,000 500 1,000 750 500 500 1,000 1,000 1,000 500 1,000 500 750 750 750 750 750 500 500 750 1,000 1,000 1,000 1,000 1,000 1,000 500 500 1,000 500 500 500 500 500 500 500 500 500 500 500 500 500 500 750 750 1,000 1,000 1,250 1,250 750 1,500 1,500 1,250 1,250 1,000 1,250 1,250 1,250 1,000 1,500 1,500 1,500 1,000 1,250 1,000 1,000 1,000 1,000 1,250 1,500 1,500 1,000 1,000 1,500 1,250 1,250 1,250 1,500 1,250 1,000 1,000 1,500 1,000 750 1,000 750 750 750 1,000 1,000 1,000 1,000 1,000 750 750 1,000 Federal Register / Vol. 81, No. 16 / Tuesday, January 26, 2016 / Rules and Regulations 4483 TABLE 3—SUMMARY OF SIZE STANDARDS REVISIONS IN NAICS SECTOR 31–33—Continued NAICs code 339920 339940 339992 339993 339995 ........ ........ ........ ........ ........ Sporting and Athletic Goods Manufacturing .................................................................................. Office Supplies (except Paper) Manufacturing .............................................................................. Musical Instrument Manufacturing ................................................................................................. Fastener, Button, Needle, and Pin Manufacturing ........................................................................ Burial Casket Manufacturing .......................................................................................................... Evaluation of 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: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) meets a specific small business definition or size standard established by SBA’s Administrator. SBA considers as part of its evaluation whether a business concern at a proposed or revised size standard would be dominant in its field of operation. SBA has determined that for the industries for which it has revised size standards in this final rule, no individual firm at or below the revised size standard will be large enough to dominate its field of operation. At the revised size standards that are adopted in this final rule, the small business share of total industry receipts among those industries for which SBA has revised size standards is, on average, 1.7 percent, ranging from a minimum of 0.02 percent to a maximum of 18.9 percent. SBA determines that these market shares effectively preclude a firm at or below the revised size standards from exerting control on any of the industries. 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) mstockstill on DSK4VPTVN1PROD with RULES3 Executive Order 12866 The Office of Management and Budget (OMB) has determined that this final rule is a significant regulatory action for purposes of Executive Order 12866. Accordingly, in the next section SBA provides a Regulatory Impact Analysis of this rule. However, this rule is not a ‘‘major rule’’ under the Congressional Review Act, 5 U.S.C. 800. Regulatory Impact Analysis 1. Is there a need for the regulatory action? SBA believes that the size standards revisions in this rule are a better reflection of the economic VerDate Sep<11>2014 Current size standard (number of employees) NAICS U.S. industry title 22:00 Jan 25, 2016 Jkt 238001 characteristics of small businesses and the Federal government marketplace in the affected industries. SBA’s mission is to aid and assist small businesses through a variety of financial, procurement, business development, and advocacy programs. To determine the intended beneficiaries of these programs, SBA establishes distinct definitions of which businesses are deemed small businesses. The Small Business Act (15 U.S.C. 632(a)) delegates to SBA’s Administrator the responsibility for establishing small business definitions. The Act also requires that small business definitions vary to reflect industry differences. The Jobs Act further requires SBA to review all size standards and make necessary adjustments to reflect market conditions. The supplementary information section of this 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 affected by this rule is their gaining or maintaining 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), economically disadvantaged women-owned small businesses (EDWOSB), and servicedisabled veteran-owned small businesses (SDVOSB). Federal agencies may also use SBA’s size standards for a variety of other regulatory and program purposes. These programs assist small businesses to become more knowledgeable, stable, and competitive. SBA estimates that in the 209 industries for which it is increasing size standards PO 00000 Frm 00049 Fmt 4701 Sfmt 4700 500 500 500 500 500 Revised size standard (number of employees) 750 750 1,000 750 1,000 about 1,250 firms, not small under the current size standards, will become small and therefore eligible for these programs. That is about 0.4 percent of all firms classified as small under the current size standards in all industries that SBA reviewed for the September 10, 2014 proposed rule and this final rule. SBA anticipates that the small business share of total receipts in those industries will increase from 26 percent to 29 percent. Four groups can benefit from the revised size standards: (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; (3) Federal agencies that will have a larger pool of small businesses from which to draw for their small business procurement programs; and, (4) wholesalers and dealers that sell products to the Federal government as small businesses under the nonmanufacturer rule (13 CFR 121.406(b)) will have additional sources of goods to fill their orders. SBA estimates that firms gaining small business status under the revised size standards might receive Federal contracts totaling $150 million to $160 million annually under SBA’s small business, 8(a), SDB, HUBZone, WOSB, EDWOSB, and SDVOSB Programs, as well as 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. SBA provides financial assistance to small businesses under its 7(a) and 504 Loan Programs. Under SBA’s 7(a) and 504 Loan Programs, based on the fiscal years 2012–2014 data, SBA estimates approximately 20 to 25 SBA loans E:\FR\FM\26JAR3.SGM 26JAR3 mstockstill on DSK4VPTVN1PROD with RULES3 4484 Federal Register / Vol. 81, No. 16 / Tuesday, January 26, 2016 / Rules and Regulations totaling about $10 million to $15.0 million could be made to these newly defined small businesses under the revised size standards. However, it is impractical to try to estimate the number and total amount of loans with any precision. There are two reasons for this: (1) Under the Jobs Act, SBA can now guarantee substantially larger loans than in the past; and (2) as described above, the Jobs Act established a higher 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. 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 a disaster in the future, SBA cannot make a meaningful estimate of this impact. In addition, newly defined small businesses will also benefit through reduced fees, less paperwork, and fewer compliance requirements that are available to small businesses throughout the Federal government. To the extent that 1,250 newly defined small firms may become active in Federal procurement programs, the revised size standards might also add administrative costs to the government because there are now more businesses eligible for Federal small business programs. For example, there will be more firms seeking SBA’s guaranteed loans, more firms eligible for enrollment in the SAM database, and more firms seeking certification as 8(a) or HUBZone firms or qualifying for small business, WOSB, EDWOSB, SDVOSB, and SDB status. Among those newly defined small businesses seeking Federal assistance, there could be additional costs associated with compliance and verification of small business status and administration of size protests. However, SBA believes that these added administrative costs will be minimal because there are mechanisms in place to handle these requirements. Additionally, some Federal government contracts might have higher costs. With a greater number of businesses defined as small under the revised size standards, Federal agencies may set aside more contracts to small businesses, rather than use 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. However, the additional costs associated with fewer bidders are expected to be minor since, by law, procurements may be set aside VerDate Sep<11>2014 22:00 Jan 25, 2016 Jkt 238001 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. In addition, there may be higher costs when more full and open contracts are awarded to HUBZone businesses that receive price evaluation preferences. Revised size standards might have distributional effects among large and small business contractors. 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. Some Federal contracts may be transferred to small businesses from large businesses. Large businesses may have fewer Federal contract opportunities as Federal agencies decide to set aside more contracts for small businesses. In addition, some Federal contracts may be awarded to HUBZone concerns instead of large businesses since they are eligible for price evaluation preferences when they compete on a full and open basis. Similarly, some businesses defined small under the current size standards may receive fewer Federal contracts due to increased competition from more businesses now defined as small under higher size standards. This transfer may be offset by a greater number of small business set-aside procurements. 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 from large and currently defined small businesses. Because there are so many variables affecting the Federal market, SBA cannot estimate the potential distributional impacts of these transfers with any degree of precision. The increased size standards for 209 industries and the modification of the size standard for NAICS 324110 in Sector 31–33 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. PO 00000 Frm 00050 Fmt 4701 Sfmt 4700 Executive Order 13563 Descriptions 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 in the Regulatory Impact Analysis under Executive Order 12866, above. In an effort to engage interested parties in this action, SBA presented its size standards methodology (discussed above under Supplementary Information) to various industry associations and trade groups. SBA also met with a number of industry groups and individual businesses to get their feedback on its methodology and other size standards issues. The Agency additionally conferred with Federal procurement officials that purchase products manufactured by a number of industries for which SBA proposed to increase size standards. In addition, as part of its Jobs Act tour SBA presented its size standards methodology to businesses in 13 cities in the U.S. and sought their input. The presentations 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. Moreover, 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 size 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 rule. Finally, the SBA has maintained a roster of parties (government and industry) that have expressed interest in various manufacturing industries over the last few years, and sent each of them a copy of the September 10, 2014 proposed rule to assure they had ample time and opportunity to provide comments. Increasing size standards for the industries covered in this rule 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 E:\FR\FM\26JAR3.SGM 26JAR3 Federal Register / Vol. 81, No. 16 / Tuesday, January 26, 2016 / Rules and Regulations standards were limited to a few specific industries in response to requests from the public and from Federal agencies. The majority of employee based size standards, including those in NAICS Sector 31–33, have not been reviewed since they were first established. 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 to 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 purposes of Executive Order 13132, SBA has determined that this rule has no 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 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 rule imposes no new reporting or record keeping requirements. mstockstill on DSK4VPTVN1PROD with RULES3 Final Regulatory Flexibility Analysis Under the Regulatory Flexibility Act (RFA), this rule may have a significant impact on a substantial number of small businesses in the industries covered by this rule. As described above, this rule may affect small businesses seeking Federal contracts, loans under SBA’s 7(a), 504 and Economic Injury Disaster VerDate Sep<11>2014 22:00 Jan 25, 2016 Jkt 238001 Loan Programs, and assistance under other Federal small business programs. Immediately below, SBA sets forth a final regulatory flexibility analysis (FRFA) of this 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 applies? (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? Changes in industry structure, technological changes, productivity growth, mergers and acquisitions, and updated industry definitions have changed the structure of many industries reviewed in the September 10, 2014 proposed rule and this final rule. Such changes can be sufficient to warrant revisions to current size standards for some industries. Based on the analysis of the latest data available, SBA believes that the revised size standards in this rule more appropriately reflect the size of businesses that need Federal assistance. The 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? SBA estimates that about 1,250 additional firms will become small because of revised size standards for 209 industries in NAICS Sector 31–33. That represents 0.4 percent of total firms that are small under current size standards in all industries in that Sector. This will result in an increase in the small business share of total industry receipts in Sector 31–33 from 26 percent under the current size standards to 29 percent under the size standards adopted in this final rule. The revised size standards will enable more small businesses to retain their small business status for a longer period and many others to regain small business status that may have exceeded current size standards, making it difficult for them to compete with companies that are significantly larger than they are. SBA believes that the overall impact of this rule will be positive for existing small businesses, as well as for those that exceed the current PO 00000 Frm 00051 Fmt 4701 Sfmt 4700 4485 size standards but are on the 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 a small business concern. That is, entities that do not meet SBA’s small business size standards are considered ‘‘other than small.’’ 3. What are the projected reporting, record keeping and other compliance requirements of the rule? The size standard changes impose no additional reporting or record keeping requirements on small businesses. However, qualifying for Federal procurement and a number of other programs requires that businesses register in the SAM database and certify in SAM that they are small at least once annually. Therefore, businesses opting to participate in those programs must comply with SAM requirements. Additionally, businesses affected by the changes, if they are already registered in SAM, must update their certifications and affirmations. However, there are no costs associated with SAM registration or certification. Changing size standards alters access to SBA’s programs 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 § 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 ‘‘Table of Statutory and Regulatory Size Standards Set by Agencies Other than SBA’’ (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 for purposes of compliance with that Act, after consultation with the Office of Advocacy of the U.S. Small Business Administration (5 U.S.C. 601(3)). E:\FR\FM\26JAR3.SGM 26JAR3 4486 Federal Register / Vol. 81, No. 16 / Tuesday, January 26, 2016 / Rules and Regulations 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 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 the 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, and 694a(9). 2. Amend § 121.201 in the table ‘‘Small Business Size Standards by NAICS Industry’’ as follows: a. Revise the entries for ‘‘311111’’, ‘‘311211’’, ‘‘311221’’, ‘‘311314’’, ‘‘311340’’, ‘‘311351’’, ‘‘311352’’, ‘‘311411’’, ‘‘311412’’, ‘‘311421’’, ‘‘311422’’, ‘‘311423’’, ‘‘311511’’, ‘‘311512’’, ‘‘311513’’, ‘‘311514’’, ‘‘311520’’, ‘‘311611’’, ‘‘311612’’, ‘‘311613’’, ‘‘311615’’, ‘‘311710’’, ‘‘311812’’, ‘‘311813’’, ‘‘311821’’, ‘‘311824’’, ‘‘311830’’, ‘‘311911’’, ‘‘311919’’, ‘‘311920’’, ‘‘311930’’, ‘‘311941’’, ‘‘312111’’, ‘‘312112’’, ‘‘312113’’, ‘‘312120’’, ‘‘312130’’, ‘‘312140’’, ‘‘312230’’, ‘‘313110’’, ‘‘313230’’, ‘‘314110’’, ‘‘314120’’, ‘‘315110’’, ‘‘315190’’, ‘‘315210’’, ‘‘315220’’, ‘‘315240’’, ‘‘315280’’, ‘‘316992’’, ‘‘321212’’, ‘‘321213’’, ‘‘321219’’, ‘‘321911’’, ‘‘321991’’, ‘‘322121’’, ‘‘322130’’, ‘‘322211’’, ‘‘322219’’, ‘‘322220’’, ‘‘322230’’, ‘‘322291’’, ‘‘323117’’, ‘‘324110’’, ‘‘324191’’, ‘‘325194’’, ‘‘325199’’, ‘‘325211’’, ‘‘325312’’, ‘‘325320’’, ‘‘325411’’, ‘‘325412’’, ‘‘325413’’, ‘‘325414’’, ‘‘325510’’, ‘‘325611’’, ‘‘325612’’, ‘‘325613’’, ‘‘325620’’, ‘‘325992’’, ‘‘326111’’, ‘‘326112’’, ‘‘326113’’, ‘‘326122’’, ‘‘326140’’, ‘‘326150’’, ‘‘326160’’, ‘‘326191’’, ‘‘326211’’, ‘‘326220’’, ‘‘326291’’, ‘‘327110’’, ‘‘327212’’, ‘‘327213’’, ‘‘327215’’, ‘‘327310’’, ‘‘327332’’, ‘‘327410’’, ‘‘327420’’, ‘‘327910’’, ‘‘327993’’, ‘‘331110’’, ‘‘331315’’, ‘‘331511’’, ‘‘331512’’, ‘‘332111’’, ‘‘332112’’, ‘‘332215’’, ‘‘332216’’, ‘‘332311’’, ‘‘332313’’, ‘‘332321’’, ‘‘332410’’, ‘‘332420’’, ‘‘332431’’, ‘‘332510’’, ‘‘332911’’, ‘‘332912’’, ‘‘332913’’, ‘‘332919’’, ‘‘332991’’, ‘‘332992’’, ‘‘333111’’, ‘‘333112’’, ‘‘333120’’, ‘‘333132’’, ‘‘333242’’, ‘‘333244’’, ‘‘333415’’, ‘‘333611’’, ‘‘333612’’, ‘‘333613’’, ‘‘333618’’, ‘‘333911’’, ‘‘333912’’, ‘‘333913’’, ‘‘333921’’, ‘‘333923’’, ‘‘333992’’, ‘‘333995’’, ‘‘333996’’, ‘‘334111’’, ‘‘334112’’, ‘‘334210’’, ‘‘334220’’, ‘‘334412’’, ‘‘334413’’, ‘‘334417’’, ‘‘334418’’, ‘‘334510’’, ‘‘334511’’, ‘‘334513’’, ‘‘334514’’, ‘‘334515’’, ‘‘334516’’, ‘‘334517’’, ‘‘334614’’, ‘‘335110’’, ‘‘335121’’, ‘‘335210’’, ‘‘335221’’, ‘‘335222’’, ‘‘335224’’, ‘‘335228’’, ‘‘335312’’, ‘‘335313’’, ‘‘335911’’, ‘‘335932’’, ‘‘336111’’, ‘‘336112’’, ‘‘336120’’, ‘‘336212’’, ‘‘336213’’, ‘‘336214’’, ‘‘336310’’, ‘‘336320’’, ‘‘336330’’, ‘‘336340’’, ‘‘336350’’, ‘‘336360’’, ‘‘336370’’, ‘‘336390’’, ‘‘336412’’, ‘‘336413’’, ‘‘336414’’, ‘‘336415’’, ‘‘336510’’, ‘‘336611’’, ‘‘336612’’, ‘‘336991’’, ‘‘336992’’, ‘‘336999’’, ‘‘337110’’, ‘‘337121’’, ‘‘337122’’, ‘‘337124’’, ‘‘337125’’, ‘‘337211’’, ‘‘337214’’, ‘‘337910’’, ‘‘337920’’, ‘‘339112’’, ‘‘339113’’, ‘‘339114’’, ‘‘339115’’, ‘‘339920’’, ‘‘339940’’, ‘‘339992’’, ‘‘339993’’, and ‘‘339995’’; and ■ b. Revise footnotes 3, 4, 5, and 7. The revisions read as follows: § 121.201 What size standards has SBA identified by North American Industry Classification System codes? * * * * * SMALL BUSINESS SIZE STANDARDS BY NAICS INDUSTRY NAICS U.S. industry title Size standards in millions of dollars * 311111 ......... * * * * Dog and Cat Food Manufacturing ................................................................................................. * ........................ * * 311211 ......... * * * * Flour Milling .................................................................................................................................... * ........................ * * 311221 ......... mstockstill on DSK4VPTVN1PROD with RULES3 NAICS codes * * * * Wet Corn Milling ............................................................................................................................ * ........................ * * ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... * * * * Cane Sugar Manufacturing ............................................................................................................ Nonchocolate Confectionery Manufacturing .................................................................................. Chocolate and Confectionery Manufacturing from Cacao Beans ................................................. Confectionery Manufacturing from Purchased Chocolate ............................................................. Frozen Fruit, Juice, and Vegetable Manufacturing ....................................................................... Frozen Specialty Food Manufacturing ........................................................................................... Fruit and Vegetable Canning 3 ....................................................................................................... Specialty Canning .......................................................................................................................... Dried and Dehydrated Food Manufacturing .................................................................................. Fluid Milk Manufacturing ................................................................................................................ Creamery Butter Manufacturing ..................................................................................................... Cheese Manufacturing ................................................................................................................... Dry, Condensed, and Evaporated Dairy Product Manufacturing .................................................. Ice Cream and Frozen Dessert Manufacturing ............................................................................. Animal (except Poultry) Slaughtering ............................................................................................ Meat Processed from Carcasses .................................................................................................. * ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ * 311314 311340 311351 311352 311411 311412 311421 311422 311423 311511 311512 311513 311514 311520 311611 311612 VerDate Sep<11>2014 22:00 Jan 25, 2016 Jkt 238001 PO 00000 Frm 00052 Fmt 4701 Sfmt 4700 E:\FR\FM\26JAR3.SGM 26JAR3 Size standards in number of employees 1,000 1,000 1,250 1,000 1,000 1,250 1,000 1,000 1,250 3 1,000 1,250 750 1,000 750 1,250 750 1,000 1,000 1,000 4487 Federal Register / Vol. 81, No. 16 / Tuesday, January 26, 2016 / Rules and Regulations SMALL BUSINESS SIZE STANDARDS BY NAICS INDUSTRY—Continued NAICS codes NAICS U.S. industry title Size standards in millions of dollars Size standards in number of employees 311613 ......... 311615 ......... 311710 ......... Rendering and Meat Byproduct Processing .................................................................................. Poultry Processing ......................................................................................................................... Seafood Product Preparation and Packaging ............................................................................... ........................ ........................ ........................ 750 1,250 750 * ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... * * * * Commercial Bakeries ..................................................................................................................... Frozen Cakes, Pies, and Other Pastries Manufacturing ............................................................... Cookie and Cracker Manufacturing ............................................................................................... Dry Pasta, Dough, and Flour Mixes Manufacturing from Purchased Flour .................................. Tortilla Manufacturing .................................................................................................................... Roasted Nuts and Peanut Butter Manufacturing ........................................................................... Other Snack Food Manufacturing .................................................................................................. Coffee and Tea Manufacturing ...................................................................................................... Flavoring Syrup and Concentrate Manufacturing .......................................................................... Mayonnaise, Dressing, and Other Prepared Sauce Manufacturing .............................................. * ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ * 311812 311813 311821 311824 311830 311911 311919 311920 311930 311941 * ......... ......... ......... ......... ......... ......... ......... ......... * * * * Soft Drink Manufacturing ............................................................................................................... Bottled Water Manufacturing ......................................................................................................... Ice Manufacturing .......................................................................................................................... Breweries ....................................................................................................................................... Wineries ......................................................................................................................................... Distilleries ....................................................................................................................................... Tobacco Manufacturing ................................................................................................................. Fiber, Yarn, and Thread Mills ........................................................................................................ * ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ * 312111 312112 312113 312120 312130 312140 312230 313110 * 313230 ......... * * * * Nonwoven Fabric Mills ................................................................................................................... * ........................ * * 314110 ......... 314120 ......... * * * * Carpet and Rug Mills ..................................................................................................................... Curtain and Linen Mills .................................................................................................................. * ........................ ........................ * * ......... ......... ......... ......... ......... ......... * * * * Hosiery and Sock Mills .................................................................................................................. Other Apparel Knitting Mills ........................................................................................................... Cut and Sew Apparel Contractors ................................................................................................. Men’s and Boys’ Cut and Sew Apparel Manufacturing ................................................................. Women’s, Girls’, and Infants’ Cut and Sew Apparel Manufacturing ............................................. Other Cut and Sew Apparel Manufacturing .................................................................................. * ........................ ........................ ........................ ........................ ........................ ........................ * * 316992 ......... * * * * Women’s Handbag and Purse Manufacturing ............................................................................... * ........................ * * 321212 ......... 321213 ......... * * * * Softwood Veneer and Plywood Manufacturing ............................................................................. Engineered Wood Member (except Truss) Manufacturing ............................................................ * ........................ ........................ * * 321219 ......... 321911 ......... * * * * Reconstituted Wood Product Manufacturing ................................................................................. Wood Window and Door Manufacturing ........................................................................................ * ........................ ........................ * * 321991 ......... * * * * Manufactured Home (Mobile Home) Manufacturing ...................................................................... * ........................ * * 322121 ......... * * * * Paper (except Newsprint) Mills ...................................................................................................... * ........................ * * 322130 ......... 322211 ......... * * * * Paperboard Mills ............................................................................................................................ Corrugated and Solid Fiber Box Manufacturing ............................................................................ * ........................ ........................ * * ......... ......... ......... ......... * * * * Other Paperboard Container Manufacturing ................................................................................. Paper Bag and Coated and Treated Paper Manufacturing .......................................................... Stationery Product Manufacturing ................................................................................................. Sanitary Paper Product Manufacturing .......................................................................................... * ........................ ........................ ........................ ........................ * * 323117 ......... * * * * Books Printing ................................................................................................................................ * ........................ * mstockstill on DSK4VPTVN1PROD with RULES3 315110 315190 315210 315220 315240 315280 322219 322220 322230 322291 VerDate Sep<11>2014 22:00 Jan 25, 2016 Jkt 238001 PO 00000 Frm 00053 Fmt 4701 Sfmt 4700 E:\FR\FM\26JAR3.SGM 26JAR3 1,000 750 1,250 750 1,250 750 1,250 750 1,000 750 1,250 1,000 750 1,250 1,000 1,000 1,500 1,250 750 1,500 750 750 750 750 750 750 750 750 1,250 750 750 1,000 1,250 1,250 1,250 1,250 1,000 750 750 1,500 1,250 4488 Federal Register / Vol. 81, No. 16 / Tuesday, January 26, 2016 / Rules and Regulations SMALL BUSINESS SIZE STANDARDS BY NAICS INDUSTRY—Continued NAICS codes NAICS U.S. industry title Size standards in millions of dollars * 324110 ......... * * * * Petroleum Refineries 4 ................................................................................................................... * ........................ * * 324191 ......... * * * * Petroleum Lubricating Oil and Grease Manufacturing .................................................................. * ........................ * * 325194 ......... 325199 ......... 325211 ......... * * * * Cyclic Crude, Intermediate, and Gum and Wood Chemical Manufacturing ................................. All Other Basic Organic Chemical Manufacturing ......................................................................... Plastics Material and Resin Manufacturing ................................................................................... * ........................ ........................ ........................ * * 325312 ......... * * * * Phosphatic Fertilizer Manufacturing .............................................................................................. * ........................ * * ......... ......... ......... ......... ......... ......... * * * * Pesticide and Other Agricultural Chemical Manufacturing ............................................................ Medicinal and Botanical Manufacturing ......................................................................................... Pharmaceutical Preparation Manufacturing ................................................................................... In-Vitro Diagnostic Substance Manufacturing ............................................................................... Biological Product (except Diagnostic) Manufacturing .................................................................. Paint and Coating Manufacturing .................................................................................................. * ........................ ........................ ........................ ........................ ........................ ........................ * 325320 325411 325412 325413 325414 325510 * ......... ......... ......... ......... * * * * Soap and Other Detergent Manufacturing .................................................................................... Polish and Other Sanitation Good Manufacturing ......................................................................... Surface Active Agent Manufacturing ............................................................................................. Toilet Preparation Manufacturing ................................................................................................... * ........................ ........................ ........................ ........................ * 325611 325612 325613 325620 * 325992 ......... * * * * Photographic Film, Paper, Plate, and Chemical Manufacturing .................................................... * ........................ * * 326111 ......... 326112 ......... 326113 ......... * * * * Plastics Bag and Pouch Manufacturing ......................................................................................... Plastics Packaging Film and Sheet (including Laminated) Manufacturing ................................... Unlaminated Plastics Film and Sheet (except Packaging) Manufacturing .................................... * ........................ ........................ ........................ * * 326122 ......... * * * * Plastics Pipe and Pipe Fitting Manufacturing ................................................................................ * ........................ * * ......... ......... ......... ......... * * * * Polystyrene Foam Product Manufacturing .................................................................................... Urethane and Other Foam Product (except Polystyrene) Manufacturing ..................................... Plastics Bottle Manufacturing ........................................................................................................ Plastics Plumbing Fixture Manufacturing ...................................................................................... * ........................ ........................ ........................ ........................ * * 326211 ......... * * * * Tire Manufacturing (except Retreading) 5 ...................................................................................... * ........................ * * 326220 ......... 326291 ......... * * * * Rubber and Plastics Hoses and Belting Manufacturing ................................................................ Rubber Product Manufacturing for Mechanical Use ...................................................................... * ........................ ........................ * * 327110 ......... * * * * Pottery, Ceramics, and Plumbing Fixture Manufacturing .............................................................. * ........................ * * ......... ......... ......... ......... * * * * Other Pressed and Blown Glass and Glassware Manufacturing .................................................. Glass Container Manufacturing ..................................................................................................... Glass Product Manufacturing Made of Purchased Glass ............................................................. Cement Manufacturing ................................................................................................................... * ........................ ........................ ........................ ........................ * * 327332 ......... * * * * Concrete Pipe Manufacturing ........................................................................................................ * ........................ * * 327410 ......... 327420 ......... 327910 ......... * * * * Lime Manufacturing ....................................................................................................................... Gypsum Product Manufacturing .................................................................................................... Abrasive Product Manufacturing .................................................................................................... * ........................ ........................ ........................ * 326140 326150 326160 326191 mstockstill on DSK4VPTVN1PROD with RULES3 327212 327213 327215 327310 VerDate Sep<11>2014 22:00 Jan 25, 2016 Jkt 238001 PO 00000 Frm 00054 Fmt 4701 Sfmt 4700 E:\FR\FM\26JAR3.SGM 26JAR3 Size standards in number of employees 4 1,500 750 1,250 1,250 1,250 750 1,000 1,000 1,250 1,250 1,250 1,000 1,000 750 750 1,250 1,500 750 1,000 750 750 1,000 750 1,250 750 5 1,500 750 750 1,000 1,250 1,250 1,000 1,000 750 750 1,500 750 4489 Federal Register / Vol. 81, No. 16 / Tuesday, January 26, 2016 / Rules and Regulations SMALL BUSINESS SIZE STANDARDS BY NAICS INDUSTRY—Continued NAICS codes NAICS U.S. industry title Size standards in millions of dollars * 327993 ......... * * * * Mineral Wool Manufacturing .......................................................................................................... * ........................ * * 331110 ......... * * * * Iron and Steel Mills and Ferroalloy Manufacturing ........................................................................ * ........................ * * 331315 ......... * * * * Aluminum Sheet, Plate, and Foil Manufacturing ........................................................................... * ........................ * * 331511 ......... 331512 ......... * * * * Iron Foundries ................................................................................................................................ Steel Investment Foundries ........................................................................................................... * ........................ ........................ * * 332111 ......... 332112 ......... * * * * Iron and Steel Forging ................................................................................................................... Nonferrous Forging ........................................................................................................................ * ........................ ........................ * * 332215 ......... 332216 ......... 332311 ......... * * * * Metal Kitchen Cookware, Utensil, Cutlery, and Flatware (except Precious) Manufacturing ......... Saw Blade and Handtool Manufacturing ....................................................................................... Prefabricated Metal Building and Component Manufacturing ....................................................... * ........................ ........................ ........................ * * 332313 ......... 332321 ......... * * * * Plate Work Manufacturing ............................................................................................................. Metal Window and Door Manufacturing ........................................................................................ * ........................ ........................ * * 332410 ......... 332420 ......... 332431 ......... * * * * Power Boiler and Heat Exchanger Manufacturing ........................................................................ Metal Tank (Heavy Gauge) Manufacturing ................................................................................... Metal Can Manufacturing ............................................................................................................... * ........................ ........................ ........................ * * 332510 ......... * * * * Hardware Manufacturing ................................................................................................................ * ........................ * * ......... ......... ......... ......... ......... ......... * * * * Industrial Valve Manufacturing ...................................................................................................... Fluid Power Valve and Hose Fitting Manufacturing ...................................................................... Plumbing Fixture Fitting and Trim Manufacturing .......................................................................... Other Metal Valve and Pipe Fitting Manufacturing ....................................................................... Ball and Roller Bearing Manufacturing .......................................................................................... Small Arms Ammunition Manufacturing ........................................................................................ * ........................ ........................ ........................ ........................ ........................ ........................ * * 333111 ......... 333112 ......... 333120 ......... * * * * Farm Machinery and Equipment Manufacturing ............................................................................ Lawn and Garden Tractor and Home Lawn and Garden Equipment Manufacturing ................... Construction Machinery Manufacturing ......................................................................................... * ........................ ........................ ........................ * * 333132 ......... * * * * Oil and Gas Field Machinery and Equipment Manufacturing ........................................................ * ........................ * * 333242 ......... * * * * Semiconductor Machinery Manufacturing ..................................................................................... * ........................ * * 333244 ......... * * * * Printing Machinery and Equipment Manufacturing ........................................................................ * ........................ * * 333415 ......... * * * * Air-Conditioning and Warm Air Heating Equipment and Commercial and Industrial Refrigeration Equipment Manufacturing. * ........................ * * ......... ......... ......... ......... ......... ......... ......... ......... * * * * Turbine and Turbine Generator Set Units Manufacturing ............................................................. Speed Changer, Industrial High-Speed Drive, and Gear Manufacturing ...................................... Mechanical Power Transmission Equipment Manufacturing ......................................................... Other Engine Equipment Manufacturing ....................................................................................... Pump and Pumping Equipment Manufacturing ............................................................................. Air and Gas Compressor Manufacturing ....................................................................................... Measuring and Dispensing Pump Manufacturing .......................................................................... Elevator and Moving Stairway Manufacturing ............................................................................... * ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ * mstockstill on DSK4VPTVN1PROD with RULES3 332911 332912 332913 332919 332991 332992 333611 333612 333613 333618 333911 333912 333913 333921 VerDate Sep<11>2014 22:00 Jan 25, 2016 Jkt 238001 PO 00000 Frm 00055 Fmt 4701 Sfmt 4700 E:\FR\FM\26JAR3.SGM 26JAR3 Size standards in number of employees 1,500 1,500 1,250 1,000 1,000 750 750 750 750 750 750 750 750 750 1,500 750 750 1,000 1,000 750 1,250 1,250 1,250 1,500 1,250 1,250 1,500 750 1,250 1,500 750 750 1,500 750 1,000 750 1,000 4490 Federal Register / Vol. 81, No. 16 / Tuesday, January 26, 2016 / Rules and Regulations SMALL BUSINESS SIZE STANDARDS BY NAICS INDUSTRY—Continued NAICS codes NAICS U.S. industry title Size standards in millions of dollars * 333923 ......... * * * * Overhead Traveling Crane, Hoist, and Monorail System Manufacturing ...................................... * ........................ * * 333992 ......... * * * * Welding and Soldering Equipment Manufacturing ........................................................................ * ........................ * * 333995 ......... 333996 ......... * * * * Fluid Power Cylinder and Actuator Manufacturing ........................................................................ Fluid Power Pump and Motor Manufacturing ................................................................................ * ........................ ........................ * * 334111 ......... 334112 ......... * * * * Electronic Computer Manufacturing .............................................................................................. Computer Storage Device Manufacturing ..................................................................................... * ........................ ........................ * * 334210 ......... 334220 ......... * * * * Telephone Apparatus Manufacturing ............................................................................................. Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing ... * ........................ ........................ * * 334412 ......... 334413 ......... * * * * Bare Printed Circuit Board Manufacturing ..................................................................................... Semiconductor and Related Device Manufacturing ...................................................................... * ........................ ........................ * * 334417 ......... 334418 ......... * * * * Electronic Connector Manufacturing .............................................................................................. Printed Circuit Assembly (Electronic Assembly) Manufacturing .................................................... * ........................ ........................ * * 334510 ......... 334511 ......... * * * * Electromedical and Electrotherapeutic Apparatus Manufacturing ................................................. Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing. * ........................ ........................ * * 334513 ......... * ........................ * ......... ......... ......... ......... * * * * Instruments and Related Products Manufacturing for Measuring, Displaying, and Controlling Industrial Process Variables. Totalizing Fluid Meter and Counting Device Manufacturing .......................................................... Instrument Manufacturing for Measuring and Testing Electricity and Electrical Signals .............. Analytical Laboratory Instrument Manufacturing ........................................................................... Irradiation Apparatus Manufacturing .............................................................................................. * 334614 ......... 335110 ......... 335121 ......... * * * * Software and Other Prerecorded Compact Disc, Tape, and Record Reproducing ...................... Electric Lamp Bulb and Part Manufacturing .................................................................................. Residential Electric Lighting Fixture Manufacturing ....................................................................... * ........................ ........................ ........................ * * ......... ......... ......... ......... ......... * * * * Small Electrical Appliance Manufacturing ..................................................................................... Household Cooking Appliance Manufacturing ............................................................................... Household Refrigerator and Home Freezer Manufacturing .......................................................... Household Laundry Equipment Manufacturing ............................................................................. Other Major Household Appliance Manufacturing ......................................................................... * ........................ ........................ ........................ ........................ ........................ * * 335312 ......... 335313 ......... * * * * Motor and Generator Manufacturing ............................................................................................. Switchgear and Switchboard Apparatus Manufacturing ................................................................ * ........................ ........................ * * 335911 ......... * * * * Storage Battery Manufacturing ...................................................................................................... * ........................ * * 335932 ......... * * * * Noncurrent-Carrying Wiring Device Manufacturing ....................................................................... * ........................ * * 336111 ......... 336112 ......... 336120 ......... * * * * Automobile Manufacturing ............................................................................................................. Light Truck and Utility Vehicle Manufacturing ............................................................................... Heavy Duty Truck Manufacturing .................................................................................................. * ........................ ........................ ........................ * * 336212 ......... 336213 ......... 336214 ......... * * * * Truck Trailer Manufacturing ........................................................................................................... Motor Home Manufacturing ........................................................................................................... Travel Trailer and Camper Manufacturing ..................................................................................... * ........................ ........................ ........................ * 334514 334515 334516 334517 mstockstill on DSK4VPTVN1PROD with RULES3 335210 335221 335222 335224 335228 VerDate Sep<11>2014 22:00 Jan 25, 2016 Jkt 238001 PO 00000 Frm 00056 Fmt 4701 Sfmt 4700 E:\FR\FM\26JAR3.SGM 26JAR3 Size standards in number of employees 1,250 1,250 750 1,250 1,250 1,250 1,250 1,250 750 1,250 1,000 750 1,250 1,250 750 ........................ ........................ ........................ ........................ 750 750 1,000 1,000 1,250 1,250 750 1,500 1,500 1,250 1,250 1,000 1,250 1,250 1,250 1,000 1,500 1,500 1,500 1,000 1,250 1,000 4491 Federal Register / Vol. 81, No. 16 / Tuesday, January 26, 2016 / Rules and Regulations SMALL BUSINESS SIZE STANDARDS BY NAICS INDUSTRY—Continued NAICS U.S. industry title NAICS codes Size standards in millions of dollars Size standards in number of employees 1,000 1,000 1,000 1,250 1,500 1,500 1,000 1,000 336310 336320 336330 336340 336350 336360 336370 336390 ......... ......... ......... ......... ......... ......... ......... ......... Motor Vehicle Gasoline Engine and Engine Parts Manufacturing ................................................ Motor Vehicle Electrical and Electronic Equipment Manufacturing ............................................... Motor Vehicle Steering and Suspension Components (except Spring) Manufacturing ................ Motor Vehicle Brake System Manufacturing ................................................................................. Motor Vehicle Transmission and Power Train Parts Manufacturing ............................................. Motor Vehicle Seating and Interior Trim Manufacturing ................................................................ Motor Vehicle Metal Stamping ....................................................................................................... Other Motor Vehicle Parts Manufacturing ..................................................................................... ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ * ......... ......... ......... ......... * * * * Aircraft Engine and Engine Parts Manufacturing .......................................................................... Other Aircraft Parts and Auxiliary Equipment Manufacturing 7 ...................................................... Guided Missile and Space Vehicle Manufacturing ........................................................................ Guided Missile and Space Vehicle Propulsion Unit and Propulsion Unit Parts Manufacturing .... * ........................ ........................ ........................ ........................ * 336412 336413 336414 336415 * ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... * * * * Railroad Rolling Stock Manufacturing ........................................................................................... Ship Building and Repairing .......................................................................................................... Boat Building .................................................................................................................................. Motorcycle, Bicycle, and Parts Manufacturing .............................................................................. Military Armored Vehicle, Tank, and Tank Component Manufacturing ......................................... All Other Transportation Equipment Manufacturing ...................................................................... Wood Kitchen Cabinet and Countertop Manufacturing ................................................................. Upholstered Household Furniture Manufacturing .......................................................................... Nonupholstered Wood Household Furniture Manufacturing ......................................................... Metal Household Furniture Manufacturing .................................................................................... Household Furniture (except Wood and Metal) Manufacturing ..................................................... * ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ * 336510 336611 336612 336991 336992 336999 337110 337121 337122 337124 337125 * 337211 ......... * * * * Wood Office Furniture Manufacturing ............................................................................................ * ........................ * * 337214 ......... * * * * Office Furniture (except Wood) Manufacturing ............................................................................. * ........................ * * 337910 ......... 337920 ......... * * * * Mattress Manufacturing ................................................................................................................. Blind and Shade Manufacturing .................................................................................................... * ........................ ........................ * * ......... ......... ......... ......... * * * * Surgical and Medical Instrument Manufacturing ........................................................................... Surgical Appliance and Supplies Manufacturing ........................................................................... Dental Equipment and Supplies Manufacturing ............................................................................ Ophthalmic Goods Manufacturing ................................................................................................. * ........................ ........................ ........................ ........................ * * 339920 ......... * * * * Sporting and Athletic Goods Manufacturing .................................................................................. * ........................ * * 339940 ......... * * * * Office Supplies (except Paper) Manufacturing .............................................................................. * ........................ * * 339992 ......... 339993 ......... * * * * Musical Instrument Manufacturing ................................................................................................. Fastener, Button, Needle, and Pin Manufacturing ........................................................................ * ........................ ........................ * * 339995 ......... * * * * Burial Casket Manufacturing .......................................................................................................... * ........................ * * * 339112 339113 339114 339115 mstockstill on DSK4VPTVN1PROD with RULES3 * * * * * * * * Footnotes * * * * * 3. NAICS code 311421—For purposes of Government procurement for food canning and preserving, the standard of 1,000 employees excludes agricultural labor as defined in 3306(k) of the VerDate Sep<11>2014 22:00 Jan 25, 2016 Jkt 238001 * * Internal Revenue Code, 26 U.S.C. 3306(k). 4. NAICS code 324110—To qualify as small for purposes of Government procurement, the petroleum refiner, including its affiliates, must be a concern that has either no more than 1,500 employees or no more than PO 00000 Frm 00057 Fmt 4701 Sfmt 4700 1,500 7 1,250 1,250 1,250 1,500 1,250 1,000 1,000 1,500 1,000 750 1,000 750 750 750 1,000 1,000 1,000 1,000 1,000 750 750 1,000 750 750 1,000 750 1,000 200,000 barrels per calendar day total Operable Atmospheric Crude Oil Distillation capacity. Capacity includes all domestic and foreign affiliates, all owned or leased facilities, and all facilities under a processing agreement or an arrangement such as an exchange agreement or a throughput. To qualify E:\FR\FM\26JAR3.SGM 26JAR3 4492 Federal Register / Vol. 81, No. 16 / Tuesday, January 26, 2016 / Rules and Regulations mstockstill on DSK4VPTVN1PROD with RULES3 under the capacity size standard, the firm, together with its affiliates, must be primarily engaged in refining crude petroleum into refined petroleum products. A firm’s ‘‘primary industry’’ is determined in accordance with 13 CFR 121.107. 5. NAICS code 326211—For Government procurement, a firm is small for bidding on a contract for pneumatic tires within Census NAICS Product Classification codes 3262111 and 3262113, provided that: (a) The value of tires within Census NAICS Product Classification codes 3262113 that it manufactured in the United States during the previous VerDate Sep<11>2014 22:00 Jan 25, 2016 Jkt 238001 calendar year is more than 50 percent of the value of its total worldwide manufacture, (b) The value of pneumatic tires within Census NAICS Product Classification codes 3262113 comprising its total worldwide manufacture during the preceding calendar year was less than 5 percent of the value of all such tires manufactured in the United States during that period, and (c) The value of the principal product that it manufactured, produced, or sold worldwide during the preceding calendar year is less than 10 percent of the total value of such products PO 00000 Frm 00058 Fmt 4701 Sfmt 9990 manufactured or otherwise produced or sold in the United States during that period. * * * * * 7. NAICS code 336413—Contracts for the rebuilding or overhaul of aircraft ground support equipment on a contract basis are classified under NAICS code 336413. * * * * * Maria Contreras-Sweet, Administrator. [FR Doc. 2016–00924 Filed 1–25–16; 8:45 am] BILLING CODE 8025–01–P E:\FR\FM\26JAR3.SGM 26JAR3

Agencies

[Federal Register Volume 81, Number 16 (Tuesday, January 26, 2016)]
[Rules and Regulations]
[Pages 4469-4492]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-00924]


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SMALL BUSINESS ADMINISTRATION

13 CFR Part 121

RIN 3245-AG50


Small Business Size Standards for Manufacturing

AGENCY: U.S. Small Business Administration.

ACTION: Final rule.

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

SUMMARY: The United States Small Business Administration (SBA) is 
increasing small business size standards for 209 industries in North 
American Industry Classification System (NAICS) Sector 31-33, 
Manufacturing. SBA is also modifying the size standard for NAICS 
324110, Petroleum Refiners, by increasing the refining capacity 
component of the size standard to 200,000 barrels per calendar day for 
businesses that are primarily engaged in petroleum refining and by 
eliminating the requirement that 90 percent of the output to be 
delivered be refined by the successful bidder from either crude oil or 
bona fide feedstocks. The Agency is also updating Footnote 5 to NAICS 
326211 to reflect the current Census Product Classification Codes 
3262111 and 3262113. As part of its ongoing comprehensive size 
standards review, SBA evaluated employee based size standards for all 
364 industries in NAICS Sector 31-33 to determine whether they should 
be retained or revised. This rule is one of a series of rules that 
result from SBA's review of size standards of industries grouped by 
NAICS Sector.

DATES: This rule is effective February 26, 2016.

FOR FURTHER INFORMATION CONTACT: Jorge Laboy-Bruno, Ph.D., Economist, 
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 size standards generally use 
two primary measures of business size, average annual receipts and 
average 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), Certified Development Company (CDC/504) and 7(a) Loan Programs 
determine small business eligibility using either the industry based 
size standards or an alternative size standard based on both net worth 
and net income. At the start of the current comprehensive review of 
size standards, there were 41 different size standards, covering 1,141 
NAICS industries and 18 ``exceptions.'' in SBA's table of size 
standards. Of these, 31 were based on average annual receipts, seven on 
average number of employees, and three on other measures. Presently, 
there are 28 different size standards, covering 1047 NAICS industries 
and 16 ``exceptions.'' Of these NAICS industries and exceptions, 533 
are covered by size standards based on average annual receipts, 509 on 
average number of employees, and five on average assets.
    Over the years, some members of the public have remarked that SBA's 
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 size 
standards review was in the late 1970s and early 1980s. Size standards 
reviews since then, until this comprehensive review, were generally 
limited to a few specific industries in response to requests from the 
public and from Federal agencies. SBA also makes periodic inflation 
adjustments to its monetary based size standards. The latest inflation 
adjustment to size standards was effective July 14, 2015 (79 FR 33647 
(June 12, 2014)).
    Because of changes in industry structure and the Federal 
marketplace since the last overall review, current data no longer 
supported existing size standards for some industries. Accordingly, in 
2007, SBA began a comprehensive review to determine whether existing 
size standards are consistent with current data, and to revise 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), 111 
Public Law 240, 124 Stat. 2504, Sep. 27, 2010. The Jobs Act

[[Page 4470]]

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 every18-month period 
from the date of its enactment and review of 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, 
``Improving Regulation and Regulatory Review.''
    SBA has chosen not to review all size standards at one time. 
Rather, the Agency is reviewing groups of related industries on an 
NAICS Sector by Sector basis.
    As part of SBA's comprehensive size standards review, grouped by 
NAICS Sector, the Agency reviewed the 364 size standards for industries 
in NAICS Sector 31-33, Manufacturing, to determine whether they should 
be retained or revised. After its review, SBA published in the 
September 10, 2014 issue of the Federal Register (79 FR 54145) a 
proposed rule to increase size standards for 209 industries in NAICS 
Sector 31-33, Manufacturing. SBA also proposed to amend Footnote 4 to 
NAICS 324110, Petroleum Refiners, in its table of size standards in two 
ways: (1) By increasing the refining capacity component of the size 
standard from 125,000 to 200,000 barrels per calendar day total 
capacity for businesses that are primarily engaged in petroleum 
refining, and (2) by eliminating the requirement that 90 percent of the 
output to be delivered be refined by the successful bidder from either 
crude oil or bona fide feedstocks. SBA also proposed amending Footnote 
5 to NAICS 326211, Tire Manufacturing (except Retreading), to reflect 
the current Census Product Classification Codes 3262111 and 3262113.
    As part of ongoing comprehensive size standards review, SBA 
developed a ``Size Standards Methodology'' White Paper 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 included it as a supporting document in the electronic 
docket of the proposed rule at www.regulations.gov.
    In evaluating an industry, SBA generally examines its 
characteristics (such as average firm size, startup costs, industry 
competition, and distribution of firms by size) and the level and share 
of Federal contract dollars that small businesses receive. SBA also 
examines the potential impact a size standard revision might have on 
its financial assistance programs, and whether a business under a 
revised size standard would be dominant in its industry. SBA analyzed 
the characteristics of every industry in NAICS 31-33, using mostly a 
special tabulation obtained from the U.S. Bureau of the Census from its 
2007 Economic Census (the latest available). For the proposed rule, SBA 
also evaluated the small business share of Federal contracts in each of 
those industries using data from the Federal Procurement Data System--
Next Generation (FPDS-NG) for fiscal years 2009-2011. To evaluate the 
impact of changes to size standards on its loan programs, SBA analyzed 
internal data on its guaranteed loan programs for fiscal years 2010-
2012. In this final rule, SBA has updated the impacts of size standards 
changes using the FPDS-NG and loan data for fiscal years 2012-2014.
    SBA's ``Size Standards Methodology'' White Paper 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 September 10, 2014 proposed 
rule, SBA detailed how it applied its ``Size Standards Methodology'' to 
review and modify when necessary, the existing size standards for 
industries in NAICS Sector 31-33. SBA sought comments from the public 
on a number of issues about its ``Size Standards Methodology,'' such as 
whether SBA should consider other approaches; whether SBA should 
evaluate alternative or additional factors or data sources; whether 
SBA's manner of 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 current or 
comprehensive data; and whether there are other facts or issues that 
SBA should consider.
    SBA sought comments on its proposed size standards together with 
other issues that could affect a final determination. Specifically, SBA 
requested comments on the following:
    1. SBA proposed five levels of employee based size standards for 
industries in Manufacturing and for industries in other Sectors that 
have employee based size standards (except for Wholesale Trade and 
Retail Trade): 500 employees, 750 employees, 1,000 employees, 1,250 
employees, and 1,500 employees. SBA invited comments on whether these 
were appropriate levels and requested suggestions for alternatives, if 
commenters thought them more appropriate.
    2. Consistent with its policy of not lowering any size standards in 
its recently completed proposed and final rules on receipts based size 
standards, SBA proposed retaining the current 500-employee minimum and 
1,500-employee maximum size standards for all industries in the 
Manufacturing Sector. In its ``Size Standards Methodology,'' available 
at www.sba.gov/size, SBA had proposed setting the minimum size standard 
for these industries at 250 employees and the maximum size standard at 
1000 employees. That would entail lowering size standards for some 
industries. SBA invited comments on whether it should maintain the 500-
employee minimum and the 1,500-employee maximum size standards or lower 
them to 250 employees and 1,000 employees, respectively, as the Agency 
proposed in its ``Size Standards Methodology.'' SBA requested 
suggestions on alternative minimum and maximum levels, if commenters 
thought them more appropriate. For the same reason, SBA also proposed 
to retain the current size standards for 19 industries when analytical 
results might support lowering them. SBA had sought comments on whether 
SBA should lower them solely based on its analysis or retain them at 
their current levels in view of current economic conditions.
    3. SBA sought feedback on whether it should adjust employee based 
size standards for labor productivity growth. SBA periodically 
increases receipts based size standards for inflation. Should SBA take 
labor productivity growth and technological change into consideration 
when it reviews employee based standards? If so, what data are 
available to assist SBA in evaluating such factors? What if such an 
evaluation leads to lower size standards for some industries? How 
should SBA apply the results to its size standards?
    4. SBA sought feedback on whether its proposal to increase size 
standards for 209 industries and retain current size standards for 155 
industries is appropriate, given the economic characteristics of each 
industry reviewed in the proposed rule. SBA also sought feedback and 
suggestions on alternative size standards, if commenters thought them 
more appropriate.
    5. SBA invited comments on its proposal to increase the capacity 
component of the Petroleum Refiners (NAICS 324110) size standard from 
125,000 barrels per calendar day (BPCD)

[[Page 4471]]

total Operable Atmospheric Crude Oil Distillation capacity to 200,000 
BPCD and retain the employee component at the current 1,500-employee 
level. SBA also welcomed comments on its proposal to allow business 
concerns to qualify either under the 1,500-employee size standard or 
under the 200,000 BPCD capacity size standard, if the firm, together 
with its affiliates, is primarily engaged in petroleum refining. 
Finally, SBA also requested feedback on its proposal to eliminate the 
requirement that ``[t]he total product to be delivered under the 
contract must be at least 90 percent refined by the successful bidder 
from either crude oil or bona fide feedstocks.''
    6. SBA's proposed size standards were based on 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 of the evaluated industries. SBA invited comments 
on these factors and/or suggestions on other factors that it should 
consider when evaluating or revising employee based size standards. SBA 
also sought information on relevant data sources, other than what it 
uses, if available.
    7. SBA gave equal weight to each of the five primary factors in all 
industries. SBA asked for 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. SBA requested that 
recommendations to weigh some factors more than others include 
suggested weights for each factor along with supporting information.
    8. For analytical simplicity and efficiency, in the proposed rule, 
SBA 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 welcomed any comments on this procedure and 
suggestions on alternative methods.

Summary and Discussion of Comments

    SBA received 26 comments to the proposed rule, but only 17 were 
unique comments as some commenters submitted the same comment more than 
once. All of the comments are available at www.regulations.gov (RIN 
3245-AG50) and are summarized and discussed below.

Comments on NAICS 324110, Petroleum Refiners

    Footnote 4 of SBA's table of size standards relates to NAICS 
324110, Petroleum Refiners. SBA proposed to amend Footnote 4 in two 
ways: (1) By increasing the refining capacity component of the size 
standard from 125,000 barrels per calendar day (BPCD) total capacity to 
200,000 BPCD total capacity for businesses that are primarily engaged 
in petroleum refining, and (2) by eliminating the requirement that 90 
percent of the output to be delivered be refined by the successful 
bidder from either crude oil or bona fide feedstocks.
    SBA received only one comment on these proposed changes. 
Specifically, the commenter expressed concerns about removing the 
requirement that 90 percent of the output to be delivered be refined by 
the successful bidder from either crude oil or bona fide feedstocks. 
The commenter contended that the change would have an adverse impact on 
small businesses under NAICS 424720, Petroleum and Petroleum Product 
Merchant Wholesalers, particularly those wishing to participate in the 
Defense Logistics Agency's (DLA) bulk fuel small business set aside 
program. To mitigate this, the commenter suggested a provision allowing 
the procuring agency to source refined petroleum products from small 
businesses in NAICS 424720 under a small business set-aside program. 
Assuming that waivers of the nonmanufacturer rule will be eliminated 
under the proposed rule, the commenter suggested some changes to the 
waiver rule.

SBA's Response

    The changes affect only the small business eligibility of petroleum 
refiners. They do not affect the eligibility of wholesalers and other 
suppliers of petroleum products. Companies that qualify as small for 
supplying petroleum products they did not manufacture or produce can 
continue to qualify as small under SBA's nonmanufacturer rule (13 CFR 
121.406(b)). Under the nonmanufacturer rule, a business is deemed small 
if it has 500 or fewer employees (including its affiliates), is 
primarily engaged in the retail or wholesale trade and normally sells 
the type of item being supplied, takes ownership or possession of the 
product, and provides the product of a small manufacturer (in this 
case, the product of a small petroleum refiner). The proposed changes 
do not affect the 500-employee nonmanufacturer size standard and hence 
the eligibility of wholesalers and dealers of petroleum products under 
the nonmanufacturer rule.
    Based on evaluation of relevant industry and procurement data and 
public comments to the proposed rule, in this final rule, SBA is 
adopting the changes to the size standard for NAICS 324110, as 
proposed. Specifically, SBA is increasing the refining capacity 
component of the Petroleum Refiners (NAICS 324110) size standard from 
125,000 BPCD to 200,000 BPCD total capacity for businesses that are, 
together with their affiliates, primarily engaged in refining crude 
petroleum into refined petroleum products. A firm's ``primary 
industry'' is determined in accordance with 13 CFR 121.107. In 
addition, the final rule eliminates the requirement that 90 percent of 
output being delivered is refined by a successful bidder. Accordingly, 
SBA also revises Footnote 4 of SBA's table of size standards to reflect 
these changes.
    Under the revised size standard, for purposes of Federal 
procurement, a petroleum refiner can qualify as small under the 1,500-
employee size standard or under the 200,000 BPCD total capacity size 
standard. To qualify under the capacity size standard, the firm, 
together with its affiliates, must be primarily engaged in refining 
crude petroleum into refined petroleum products. SBA is removing the 
requirement that 90 percent of the output to be delivered be refined by 
the successful bidder from either crude oil or bona fide feedstocks 
because the general requirement on a supply contract that is set aside 
for small business is that the small business manufacturer must perform 
50 percent of the cost of manufacturing, or may not subcontract more 
than 50 percent of the contract to another firm.

Comments on NAICS 316210, Footwear Manufacturing

    SBA received seven comments on NAICS 316210, Footwear 
Manufacturing. The current size standard for NAICS 316210 is 1,000 
employees and SBA proposed to retain it at the current level. Four 
comments supported SBA's proposal, while two opposed it. The seventh 
comment was ambiguous with respect to the size standard. These comments 
and SBA's responses are discussed below.

Comments Supporting the Current 1,000-Employee Size Standard for NAICS 
316210

    Three footwear manufacturers supported maintaining the current 
1,000-employee size standard for NAICS 316210. All three stated that 
they are the major and continuous suppliers to the U.S. military, and 
footwear products they manufacture meet the specifications as required 
by the U.S. Department of Defense (DoD) and the

[[Page 4472]]

Berry Amendment (10 U.S.C. 2533a). The Berry Amendment requires DoD to 
give preference in procurement to domestically produced, manufactured, 
or home-grown products, most notably food, clothing, fabrics, and 
specialty metals. Normally, one would expect special manufacturing 
requirements to point to the need for a larger size standard, not 
lower. Additionally, all three argued that, unlike large footwear 
manufacturers with diversified market and product bases, they rely 
heavily on small business contracts from the U.S. Defense Logistics 
Agency (DLA) for their survival. Two of these commenters also agreed 
with SBA's position of not reducing size standards in the current 
economic environment.
    The first commenter explained that footwear contractors to DoD are 
often torn between two forces: (1) The need to increase the number of 
employees to meet DoD's needs, and (2) the need to maintain small 
business status to compete for DoD contracts. The commenter maintained 
that footwear manufacturing is highly labor intensive and DoD contract 
awards and their completions are associated with significant changes in 
employee headcounts. Significant swings in employee counts also occur 
with elevated demands for footwear by DoD during times of war, the 
commenter added. The commenter argued that retaining the current 1,000-
employee size standard enables small businesses to meet DoD's needs 
without jeopardizing their small business status. This would also 
minimize the frequency of swings between small and large business 
status among footwear contractors and the impact on the DoD's supply 
chain, the commenter added. The same commenter stated that it relies on 
its small business status to be able to compete with large businesses. 
Many large businesses in the footwear industry are diverse, multi-
national corporations with several thousand employees with 
significantly more resources and cost efficiencies, the commenter 
explained. The commenter asserted that DoD contracts are often awarded 
based on the lowest price where large businesses have significant cost 
advantages, and would be able to squeeze out small businesses if there 
were no small business protection. The 1,000-employee size standard 
helps small footwear manufacturers protect themselves as suppliers to 
DoD, the commenter concluded.
    The second commenter also maintained that many contracts it 
received to supply combat boots to the U.S. military were awarded 
because of its small business status. Unless the small business size 
standard remains at 1,000 employees, its future will be in jeopardy, 
the commenter added. The commenter asserted that lowering the size 
standard would have a negative impact on its business and employees it 
supports. Any change in the size standard below the 1,000-employee 
level would definitely have a negative impact on its ability to 
continue manufacturing footwear for DoD and the industry, the commenter 
noted.
    The third commenter, whose primary customers include DoD/DLA, 
supported keeping the 1,000-employee size standard because it allows 
for employment fluctuations during the course of contract performance. 
The commenter stated that, prior to October 1, 2012, when the size 
standard for NAICS 316210 was 500 employees, the majority of DoD 
contracts for combat boots went to large businesses with several 
thousand employees against which the company had a difficult time 
competing on a full and open basis. There are significant differences 
in resources available to companies with many thousands of employees 
versus those with less than 1,000 employees, the commenter added. To 
demonstrate that the company has been the foremost innovator for 
military footwear, the commenter provided numerous new combat boots it 
developed over the years. In light of the decimation of U.S. footwear 
manufacturing industry by imports reducing its share of all footwear 
purchase in the U.S. to less than 2 percent in 2013, the 500-employee 
footwear manufacturing size standard established more than a half 
century ago has grown out of date with the realities of the industry, 
the commenter explained. This commenter also stated that because the 
footwear industry is highly labor intensive, one DoD award can easily 
cause a contractor's employment level to increase by 10-20 percent or 
more, resulting in a change to its status from a small business to a 
large business during the course of the contract. This can be very 
disruptive to the company and its employees, the commenter added. The 
commenter also provided a detailed analysis of average firm size, 
startup costs and entry barriers, industry competition, and Federal 
contracting trends in support of SBA's proposal to maintain the 1,000-
employee size standard for Footwear Manufacturing. If the size standard 
were to revert to 500 employees for NAICS 316210, it would have a 
lasting negative impact on its business and harm the areas where its 
employees live, the commenter concluded.
    SBA also received a joint comment from two elected officials 
supporting the 1,000-employee size standard for Footwear Manufacturing 
on behalf of a footwear manufacturer operating factories in their 
Districts. They maintained that the company manufactures its Berry 
Amendment-compliant footwear in the U.S. and is a major supplier to the 
U.S. military. They supported SBA's proposal to maintain the current 
1,000-employee size standard for Footwear Manufacturing in light of 
decreases in DLA contracts for military boots as it would help the 
company remain competitive in the market. The commenters added that 
lowering the size standard is not in the best interest of small 
footwear manufacturers in the current economic environment.

Comments Opposing the Current 1,000-Employee Size Standard for NAICS 
316210

    SBA received two comments opposing the 1,000-employee size standard 
for footwear manufacturers. One was from a footwear manufacturing 
subsidiary of a large multi-national company and the other was from an 
elected official. These comments and SBA's responses are below.
    The first commenter argued that in 2012, SBA, without prior notice 
or opportunity to comment, issued an interim final rule to revise size 
standards to conform to NAICS 2012. The commenter also questioned SBA's 
justification for using an interim final rule (IFR). The commenter 
asserted that the 1,000-employee size standard for Footwear 
Manufacturing was adopted solely for administrative reasons without 
substantive analyses of industry and Federal contracting data as 
required by the Small Business Act or SBA's own size standards 
methodology. The commenter further argued that SBA consolidated five 
separate footwear manufacturing NAICS codes into one footwear 
manufacturing code (NAICS 316210) and changed the size standard from 
500 employees to 1,000 employees by arbitrarily selecting the highest 
size standard in the group. The commenter added that SBA did not 
provide a detailed analysis and justification to establish a single 
size standard for a group of 4-digit NAICS codes as required by 15 
U.S.C. 632(a)(7). The commenter maintained that the increase of size 
standard to 1,000 employees has allowed one or two firms between 500 
employees and 1,000 employees to become dominant in the military 
footwear industry. The commenter contends that has harmed truly small 
businesses by forcing them to compete

[[Page 4473]]

against much larger firms even in small business set aside 
procurements, as well as large businesses by forcing agencies to use 
small business set asides and precluding them from participating in the 
market.
    The commenter claimed that the current proposed rule and proposed 
size standards are fundamentally flawed. The commenter contended that 
the proposed rule does not meet the requirements of the Jobs Act 
because the Agency has not held two public forums in different 
geographic regions of the country as required by the Jobs Act. The 
commenter claimed that the actual industry data not only fails to 
support the current 1,000-employee size standard for Footwear 
Manufacturing, but supports lowering it to below 500 employees. In 
addition, the commenter argued that SBA failed to explain how the 
1,000-employee size standard is appropriate for Footwear Manufacturing. 
The commenter stated that in addition to being based on the faulty 2012 
IFR, the proposed size standard for Footwear Manufacturing is based on 
insufficient data and is not supported by the publicly available data. 
The commenter argued that the proposed rule provides no data for start-
up costs, industry competition, or size distribution of firms relating 
to the footwear manufacturing industry. Similarly, there is no 
discussion on secondary factors (such as technological changes, 
industry growth trends, and SBA financial assistance and program 
factors), the commenter contended. The commenter maintained that SBA 
has not published data related to the vast majority of the primary 
factors it must consider and has not provided sufficient analysis of 
the size standard. SBA's failure to gather and consider data on each of 
the required factors demonstrates that the rulemaking is legally 
deficient, the commenter argued.
    The commenter argued that the limited data SBA provides does not 
support the 1,000-employee size standard for military footwear 
manufacturing; the actual data require a lower size standard. The 
commenter stated that, with the 1,000-employee size standard, every 
significant domestic manufacturer of military footwear, except for two 
companies, is now considered a small business. The commenter maintained 
that publicly available Federal procurement data show that SBA's 
improper change to a 1,000-employee size standard has allowed ``small 
business'' to take a substantial share of the military footwear market. 
The commenter alleged that SBA's data on Federal contracting is 
inaccurate because the Agency has willfully and arbitrarily excluded 
Federal contracting data after October 2012 from its analysis. For 
example, SBA asserts that small businesses account for 7.8 percent of 
the Federal footwear market, while FPDS-NG demonstrates that the actual 
percentage is much higher, the commenter claimed.
    The commenter contended that the 1,000-employee size standard for 
the footwear manufacturing industry has created a situation where one 
firm is now dominant in the industry. By raising the size standard from 
500 employees to 1,000 employees, SBA has allowed two previously large 
firms to be reclassified as small, such that six of the eight companies 
in the industry are ``small'' businesses, the commenter maintained. 
Accounting for more than 28 percent of fiscal year 2014 dollars spent 
in NAICS 316210 nationwide and more than twice the share of other small 
business, one small business has become dominant in the industry, the 
commenter argued. SBA cannot adopt size standards which would cause a 
concern to become dominant in its field of operation, the commenter 
added. The commenter argued that SBA has provided no data to support 
its statement that no individual firm at or below the proposed size 
standards will be large enough to dominate its field of operation. SBA 
has not performed such an analysis with respect to the footwear 
manufacturing industry and failed to comply with the statutory 
requirement that small businesses are only those that are not dominant 
in their field of operation, the commenter alleged.
    The commenter argued that SBA's position not to lower size 
standards, even when its analysis might support a reduction, is 
arbitrary and capricious and violates the requirements of the Act and 
SBA's own methodology. This ``policy'' is inconsistent with 
congressional intent and SBA's mission to aid, counsel, assist and 
protect the interests of small business concerns, the commenter 
maintained. The commenter added that this policy results in otherwise 
large businesses being identified as small and being afforded special 
treatment that was intended for small businesses, with repercussions 
for the entire industry that SBA is required to consider. The commenter 
contended that there is no basis to support SBA's assertion that not 
lowering size standards would create jobs. Changing size standards 
would have no impact on the government's demands for goods and services 
and job creation, the commenter explains. In other words, the commenter 
suggested that there is no impact on the economy and job creation 
whether the contracts are performed by large or small businesses. The 
commenter further argued that SBA failed to consider the impacts the 
size standard changes would have by precluding certain companies from 
Federal opportunities or by forcing truly small businesses to compete 
against otherwise large businesses.
    The commenter argued that to comply with U.S. military requirements 
and the Berry Amendment, military footwear manufacturing involves a 
very distinct production process from commercial footwear 
manufacturing. Thus, the commenter recommended that SBA create a 
military footwear manufacturing exception to NAICS 316210, with a size 
standard of 500 employees. The commenter argued that, given the special 
production requirements necessary to comply with the Berry Amendment, 
the military footwear industry supports a separate industry designation 
as an exception to NAICS 316210. The commenter recommended that SBA 
return the size standard for Footwear Manufacturing to 500 employees 
and create a separate size standard for the military footwear industry 
as an exception to NAICS 316210 with a size standard well below 500 
employees.
    The second commenter, an elected official, expressed concerns about 
the size standard for Footwear Manufacturing. The commenter contended 
that the size standard for Footwear Manufacturing, increased in 2012 
from 500 employees to 1,000 employees, not only endangers an already 
fragile footwear manufacturing base, but also negatively affects the 
small businesses the proposed rule is designed to assist. The commenter 
maintained that, with only a limited number of companies remaining that 
can produce Berry Amendment compliant footwear, the size standard 
change for Footwear Manufacturing will have a detrimental impact on the 
military's ability to procure high quality and consistent products. The 
commenter added that the proposed 1,000-employee size standard for 
Footwear Manufacturing has created a dominant firm within the size 
standard contradicting the intent of the proposed rule. The commenter 
recommended that SBA reconsider the proposed rule and return the small 
business size standard for Footwear Manufacturing to 500 employees. 
This will not only ensure fair competition among the few remaining 
Berry compliant footwear manufacturers, but will also preserve the 
military's ability to obtain consistent quality footwear, the commenter 
concluded.

[[Page 4474]]

    Another commenter supported a change to NAICS 316210 allowing a 
separate classification for the Berry Amendment footwear. The commenter 
also supported changing the small business classification to make the 
business field more competitive. However, it was not clear whether the 
comment was for increasing or decreasing the size standard for Footwear 
Manufacturing.

SBA's Response

    Every five years, with a notice and comment process, the Office of 
Management and Budget (OMB) reviews and updates the NAICS industry 
definitions to reflect changes in the U.S. economy. In each NAICS 
update, OMB may create new industries and merge or modify others. In 
the 2012 update, effective January 1, 2012, OMB merged the five 
footwear manufacturing industries into a single, new NAICS industry--
NAICS 316210, Footwear Manufacturing. Thus, the commenter's statement 
that SBA consolidated the five industries into one category is not 
accurate.
    When OMB merges multiple NAICS industries or their parts into a 
single industry, SBA must determine a size standard for the new 
industry when adopting the updated NAICS to its table of size 
standards. For this, as explained in the IFR, SBA used a bright-line 
approach to adopting the highest size standard among the merged 
industries as the size standard for the new industry. Of the five 
merged footwear manufacturing industries, one had a 1,000-employee size 
standard, while four had a 500-employee size standard. Accordingly, SBA 
adopted a 1,000-employee size standard for the new footwear 
manufacturing industry. SBA applied the same approach to determine the 
size standard for about 25 other new or modified industries in NAICS 
2012. SBA had applied this approach to update its size standards in 
response to the 2002 and 2007 NAICS updates with no adverse comments. 
To do otherwise and adopt a lower size standard would result in firms 
being disqualified from small business status without any analysis, 
comment or opportunity for review. There is no evidence that SBA's 
approach has ever resulted in firms that are dominant in the industry 
qualifying as small business concerns.
    After receiving no inter-agency comments, SBA published the updated 
size standards as an IFR on August 20, 2012 (77 FR 49991), with an 
effective date of October 1, 2012. SBA provided a detailed 
justification for using the IFR with an effective date of October 1, 
2012. The commenter's argument that SBA provided no opportunity to 
comment on the rule is incorrect. SBA provided a 60-day comment period 
for the public and other concerned parties to comment on the size 
standards changes adopted in the interim final rule. SBA received only 
one comment on the IFR, which was unrelated to the 1,000-employee size 
standard for NAICS 316210, Footwear Manufacturing. Therefore, the 
1,000-employee size standard for NAICS 316210, Footwear Manufacturing, 
has been in effect since October 1, 2012.
    SBA does not agree with the commenter's assertion that SBA did not 
provide a detailed analysis and justification for establishing a single 
size standard for a group of industries at the 4-digit NAICS level as 
required by 15 U.S.C. 632(a)(7). That requirement only applies when SBA 
intends to establish a common size standard for a group of existing 6-
digit NAICS codes at the 4-digit NAICS Industry Group level. It does 
not apply to the size standard that SBA adopted for NAICS 316210, 
Footwear Manufacturing, the new industry that OMB created by merging 
multiple NAICS industries as part of its NAICS 2012 updates because the 
five industries have similar production processes.
    SBA disagrees with most of the arguments from the commenter 
regarding the Jobs Act and the analysis in the proposed rule. The 
commenter's allegation that SBA has not held any public forums under 
the Jobs Act is simply not correct. To obtain public input on numerous 
provisions under the Jobs Act, in 2011, SBA presented its size 
standards methodology to businesses in 13 cities in the U.S. and sought 
their input. SBA also provided information on the status of the 
comprehensive size standards review and on how interested parties can 
provide SBA with input and feedback on the size standards review.
    SBA does not agree with the commenter's claim that the Agency 
failed to explain how the 1,000-employee size standard is appropriate 
for the footwear manufacturing industry. In the proposed rule, SBA 
detailed what industry and Federal contracting factors the Agency 
considered, how they were calculated, what data sources it examined, 
and how the results were translated to size standards supported by each 
factor. The 2012 IFR had no impact on the SBA's September 10, 2014 
proposed rule to retain the 1,000-employee based size standard for 
Footwear Manufacturing.
    As explained in the September 10, 2014 proposed rule, due to the 
lack of data on actual start-up costs, SBA uses average assets as a 
proxy for start-up costs. SBA calculates average assets by combining 
the sales to total assets ratio for an industry from the Risk 
Management Association's (RMA) Annual eStatement Studies with average 
receipts from the Economic Census data. The 2009-2011 RMA data, the 
latest available when SBA prepared the proposed rule, did not contain 
the sales to assets ratio for the Footwear Manufacturing industries. 
Therefore, the average assets factor was left blank for Footwear 
Manufacturing. SBA measures industry competition using the four-firm 
concentration ratio and estimates a size standard only if its value is 
40 percent or more. SBA did not have the data to compute the four-firm 
ratio for Footwear Manufacturing. Thus, that factor was not included in 
the analysis. As explained in the proposed rule as well as in SBA's 
size standards methodology, SBA analyzes the size distribution of firms 
using the Gini coefficient. The Gini coefficient factor was included 
for Footwear Manufacturing. As part of its review, SBA evaluates small 
business participation on Federal contracting and SBA's loan programs 
under both existing and proposed size standards as well.
    The Federal contracting factor was evaluated for every industry, 
including Footwear Manufacturing. The impact on loan programs was 
evaluated on a more general basis as the vast majority of businesses 
receiving SBA's loans are well below the size standards. Aggregated 
impacts of proposed size standards on SBA's financial assistance and 
Federal procurement were provided as part of the regulatory impact 
analysis of the proposed rule. It was not practical to include the 
results for each of the 364 industries covered by the proposed rule. 
SBA considers secondary factors on a case by case basis. While the 
commenter complained that SBA did not consider secondary factors, it 
did not indicate what secondary factors SBA should consider in 
reviewing the size standard for Footwear Manufacturing. Regarding the 
publication of data, SBA provided the results for every primary factor 
and each industry, unless the data were not available or the results 
were not relevant. Additionally, the majority of the data SBA used in 
the proposed rule are publicly available.
    While the commenter claimed that actual industry data support 
lowering the size standard for Footwear Manufacturing to below 500 
employees, it did not provide any specific industry data or analysis to 
support its claim. The commenter's allegation that SBA willfully and 
arbitrarily excluded the Federal contracting data from October 2012 is 
incorrect. When SBA prepared

[[Page 4475]]

the proposed rule, the latest Federal contracting data that were 
available was for fiscal year 2011. The commenter wrongly interpreted 
the 7.8 percent Federal contracting factor for Footwear Manufacturing 
as the small business share of Federal footwear market. As explained in 
the proposed rule, that value represents the difference between small 
business share of total industry receipts (36.2%) and small business 
share of total contract dollars (44.0%) for Footwear Manufacturing.
    SBA disagrees with the comment that the 1,000-employee size 
standard has allowed firms that are dominant in the footwear 
manufacturing industry to qualify as small. Similarly, SBA also 
disagrees with the argument that SBA did not perform the dominant 
analysis for Footwear Manufacturing. SBA examined the market share 
(i.e., share of total industry's receipts) of firms that would become 
small under the proposed size standard in each industry and determined 
that no individual firm at or below the proposed size standard would be 
large enough to dominate its field of operation. Since it was not 
practical to include the market share for each of the 364 industries, 
SBA provided a range of values. Among the industries for which the 
Agency proposed to change the size standards in Manufacturing, the 
small business market share varied from 0.02 percent to 18.9 percent, 
averaging 1.7 percent. For Footwear Manufacturing, that value was 1.9 
percent, suggesting that at that level market share no individual firm 
would be dominant under the proposed 1,000-employee size standard. SBA 
looks at the share of total industry receipts, not Federal contract 
dollars, to determine if a firm is dominant in the industry. Again, SBA 
considers a firm to be dominant when it is dominant in the entire 
industry, which in this case is NAICS 316210, Footwear Manufacturing. 
It does not relate to a specific product line manufactured by a 
particular company in that industry, or a particular agency. Otherwise, 
the number of companies dominant in their industries, based on a 
specific product they manufacture, would be too numerous to identify.
    Furthermore, the data does not support the argument that the 1,000-
employee size standard has harmed the companies below 500 employees by 
forcing them to compete against companies with 500-1,000 employees for 
small business set aside procurements. The results from small business 
goaling data shown in Table 1, ``Contract Dollars in Footwear 
Manufacturing by Business Size,'' show that the share of companies 
below 500 employees in total contract dollars in Footwear Manufacturing 
related industries increased from about 31 percent during fiscal years 
2011-2012 (i.e., prior to the 1,000-employee size standard) to 46 
percent during fiscal years 2013-2014 (i.e., after the 1,000-employee 
size standard). More importantly, small business dollars awarded to 
firms below 500 employees increased from $32 million to $49 million, an 
increase of more than 50 percent. Similarly, the results also do not 
support the argument that the 1,000-employee size standard has reduced 
Federal opportunities for firms that are above the size standard. As 
can be seen from the table, dollars awarded to firms above 1,000 
employees have increased more than 50 percent from $18 million per year 
during fiscal years 2011-2012 to more than $27 million during fiscal 
years 2013-2014. It is not that firms between 500 and 1,000 employees 
that became small under the 1,000-employee size standard are getting 
more contracts now, thereby reducing opportunities for firms below 500 
employees and those above 1,000 employees. The data shows that they 
continued to get those contracts, but as small businesses under the 
1,000-employee size standard. In fact, firms between 500 and 1,000 
employees lost some of their market share to firms below 500 employees 
and those above 1,000 employees under the higher size standard.

  Table 1--Contract Dollars in Footwear Manufacturing by Business Size
                             [In $ million]
------------------------------------------------------------------------
   Business size  (number of
          employees)             Average 2011-2012    Average 2013-2014
------------------------------------------------------------------------
                        Other than small business
------------------------------------------------------------------------
NA............................                  3.2                  0.1
------------------------------------------------------------------------
>=500.........................                  0.3                  0.5
>500 to >=1,000...............                 45.4                  5.3
>1,000........................                 18.4                 27.6
Other than small total........                 67.3                 33.4
------------------------------------------------------------------------
                             Small business
------------------------------------------------------------------------
NA............................                  3.3                  1.0
>=500.........................                 31.6                 48.6
>500 to >=1,000...............                  1.8                 23.1
>1,000........................                  0.3                  0.2
Small total...................                 36.9                 72.9
------------------------------------------------------------------------
                                 Overall
------------------------------------------------------------------------
NA............................                  6.5                  1.1
>=500.........................                 31.9                 49.1
>500 to >=1,000...............                 47.2                 28.4
>1,000........................                 18.7                 27.8
Overall total.................                104.3                106.4
------------------------------------------------------------------------

    SBA is unable to verify the argument that one previously large 
business that became small under the 1,000-employee size standard 
captured more than 28 percent of total small business dollars awarded 
under NAICS 316210 in 2014.

[[Page 4476]]

Based on the analysis of contract data for Fiscal year 2014, SBA found 
no individual firm receiving more than 12 percent of small business 
dollars awarded under for NAICS 316210. Moreover, because agencies 
still continued to apply older footwear manufacturing NAICS codes 
(albeit incorrectly) for footwear contracts, the results based on NAICS 
316210 alone would be misleading. Using the data for all footwear 
manufacturing related NAICS codes, SBA found that no individual firm 
accounted for more than 19 percent of small business dollars awarded in 
those NAICS codes for fiscal year 2014. These levels of market share do 
not suggest that the size standard has classified dominant firms as 
small.
    SBA disagrees with the comment that the Agency's decision not to 
lower any size standards was arbitrary and capricious and violates the 
statute and Agency's methodology. Although not lowering small business 
size standards has been SBA's general policy to enhance small business 
participation in Federal programs in the current economic environment, 
SBA does make exceptions. For example, in a final rule (RIN 3245-AG51) 
published elsewhere in this Federal Register, SBA has lowered size 
standards for three mining industries that are not part of 
Manufacturing, Wholesale Trade, or Retail Trade. In the September 10, 
2014 proposed rule, SBA provided a detailed analysis to explain why 
lowering size standards would be against the best interests of small 
businesses. SBA believes that businesses below 500 employees will be 
better off competing with companies up to 1,000 employees for small 
business set aside procurements than competing for unrestricted 
procurements against companies that have several thousand employees. 
Because small businesses do not have the economies of scale 
(automation, marketing, production, technology, etc.) that larger 
enterprises have, small businesses generally increase their employees, 
resources, and tools when they get a new contract. As a result, SBA 
believes that small businesses will add more to the economy by hiring 
people, and purchasing equipment, materials, and technology that larger 
businesses might already have on hand.
    SBA disagrees and does not see the need for creating an exception 
for military footwear manufacturing. According to the information 
provided by the commenter, there exist numerous firms that are already 
in compliance with the Berry Amendment. SBA is not convinced with the 
rationale why a lower size standard is warranted to comply with 
contracts with certain requirements. The Berry Amendment requires DoD 
to give preference in procurement to domestically produced, 
manufactured, or home-grown products, most notably food, clothing, 
fabrics, and specialty metals. Normally, one would expect special 
manufacturing requirements to point to the need for a larger size 
standard, not lower.
    In addition, the available industry data does not support a 500-
employee size standard for Footwear Manufacturing, especially for 
military footwear manufacturing. Firms serving the military footwear 
market are, on average, considerably larger than the rest of the firms 
in the industry. Thus, it would be inconsistent to have a lower size 
standard for the military footwear market and a higher standard for the 
rest of the industry. Furthermore, compliance with the Berry Amendment 
is not a function of the size of the business performing a contract. 
Rather, it is a function of the origin of the products, which small 
businesses can certainly manufacture. Moreover, there are several small 
footwear manufacturers that manufacture footwear that is compliant with 
the Berry Amendment.
    Most importantly, SBA is concerned that lowering the size standard 
would reduce the pool of small businesses that are available to meet 
the DLA/DoD requirements under small business procurements for military 
footwear. This would cause the Government to procure its needs through 
more full and open competition, thereby forcing smaller firms, 
including those between 500 employees and 1,000 employees, to compete 
with firms many times their size.
    In response to the comments, SBA updated the Federal contracting 
factor for Footwear Manufacturing using FPDS-NG data for fiscal years 
2013-2014. It should be noted that the Federal contracting factor is 
calculated based on the 1,000-employee size standard for NAICS 316210. 
Following OMB's merging of five footwear manufacturing industries to 
one industry, RMA's eStatement Studies started publishing the sales to 
total assets ratio for the new industry (NAICS 316210). Accordingly, 
using that data for years 2012-2014, SBA is now also able to calculate 
the average assets factor for NAICS 316210, which was not included in 
the proposed rule. The updated results are shown in Table 2 ``Updated 
Size Standards Analysis for Footwear Manufacturing (No. of 
Employees),'' below. As can be seen from the table, the updated results 
reconfirm the 1,000-employee size standard for NAICS 316210, Footwear 
Manufacturing.

                                           Table 2--Updated Size Standards Analysis for Footwear Manufacturing
                                                                  [Number of Employees]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                          Simple      Weighted                              Four-firm                              Calculated
                                         average      average      Average                   average                   Federal        size
                                        firm size    firm size   assets size   Four-firm       size     Gini coeffi-   contract     standard
                                        (number of   (number of  ($ million)   ratio (%)    (number of      cient    factor  (%)   (number of
                                        employees)   employees)                            employees)*                             employees)
---------------------------------------------------------------------------------------------------------------------------------------------
Factor...............................           55          550          3.7  ...........           NA        0.827          3.8        1,000
Size standard........................          500        1,500          500  ...........           NA        1,500        1,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
*Size standard for four-firm average size is not calculated because there is no data to compute the four-firm ratio.

    Therefore, based on the analyses of all supportive and opposing 
comments on the proposed rule and latest industry and contracting data 
available when this final rule was prepared, SBA is retaining the 
1,000-employee size standard for Footwear Manufacturing (NAICS 316210), 
as proposed.

Comments on Subsector 315, Apparel Manufacturing

    SBA received four comments on size standards for industries within 
NAICS Subsector 315, Apparel Manufacturing. SBA proposed to increase 
the size standard for seven industries in that subsector from 500 
employees to 750 employees.
    A commenter supported proposed increases to size standards for the 
apparel manufacturing industries from

[[Page 4477]]

500 employees to 750 employees. The commenter argued that the current 
500-employee size standard has been a major deterrent in its ability to 
hire and retain employees to meet unexpected surges in demand of 
clothing items by DLA from small businesses, especially in times of 
war. Higher size standards are important for small clothing 
manufacturers to remain eligible to compete for small business set 
aside purchases by DoD and DLA, the commenter observed. The commenter 
pointed out that, because these industries are labor intensive, higher 
size standards will offer small businesses greater opportunities to 
hire more people in different areas of the country.
    A labor organization also supported proposed increases to size 
standards for NAICS codes 315210 (Cut and Sew Apparel Contractors), 
315220 (Men's and Boys' Cut and Sew Apparel Manufacturing), 315240 
(Women's, Girls', and Infants' Cut and Sew Apparel Manufacturing), and 
315280 (Other Cut and Sew Apparel Manufacturing) from 500 employees to 
750 employees. These NAICS codes apply to procurement of military 
apparel by DoD and DLA to support U.S. troops, and the current 500-
employee size standard has made it difficult for small business apparel 
contractors to meet demands during surges in troop support acquisitions 
(also referred to as surge capability), the commenter maintained. The 
500-employee size standard has created persistent capacity and price 
problems for small businesses, the commenter added. The organization 
stated that small apparel contractors find themselves torn between the 
need to maintain the surge capabilities expected by the DLA and the 
need to maintain the small business status necessary to compete for DLA 
uniform contracts. Therefore, the 750-employee size standard will allow 
small apparel and clothing contractors to expand production temporarily 
when demand surges without jeopardizing their small business status, 
the commenter maintained. The capability to meet unexpected surges in 
demand for items such as uniforms and body armor is critical to 
maintaining warfighter readiness, the organization noted. Citing a May 
2013 survey of DLA's clothing and apparel contractors, the organization 
stated that 90 percent of respondents were dependent on DoD contracts 
for their financial viability.
    An Alaska Native Corporation representative opposed the proposed 
750-employee size standard for Subsector 315, Apparel Manufacturing. 
The Corporation owns several small disadvantaged businesses in the 
apparel manufacturing industry, the commenter observed. The commenter 
argued that raising the size standard would negatively affect the 
growth of their company and profits of their shareholders. Raising size 
standards would make a greater number of large companies eligible for 
small business status, thereby increasing competition in the apparel 
manufacturing market and reducing opportunities for their company and 
other small businesses, the commenter explained. This would be 
detrimental in light of decreases in Federal government spending in the 
apparel manufacturing market over the last 5 years because there would 
be more companies bidding on fewer contracts and fewer opportunities 
for true small businesses, the commenter concluded.
    Another commenter recommended a 250-employee size standard for 
several industries within Subsector 315, namely NAICS 315210 (Cut and 
Sew Apparel Contractors), 315220 (Men's and Boys' Cut and Sew Apparel 
Manufacturing), 315240 (Women's, Girls', and Infants' Cut and Sew 
Apparel Manufacturing), 315280 (Other Cut and Sew Apparel 
Manufacturing), and 315990 (Apparel Accessories and Other Apparel 
Manufacturing). The commenter argued that the 250-employee size 
standard would offer protection for emerging small businesses, given 
the fragility of the clothing and textile industry. However, the 
commenter provided no data or analysis to support the argument.

SBA's Response

    Based on its analysis of industry and Federal procurement data and 
public comments, SBA has determined that it will adopt the 750-employee 
size standard for the seven industries in Subsector 315, Apparel 
Manufacturing, as proposed. In recent years, DLA has strived to 
increase its awards for procuring military clothing through small 
businesses. This has put strains on many small businesses, according to 
the commenters, to meet DLA's expected surge capabilities while 
maintaining their small business size status. The increase from 500 
employees to 750 employees will allow a number of small businesses to 
take on these contracts and to hire more workers without jeopardizing 
their eligibility. Based on data from the Economic Census and System of 
Award Management (SAM), only about 10 additional businesses that are 
primarily involved in Apparel Manufacturing will qualify as small under 
the 750-employee size standard. SBA does not believe that the higher 
size standard will cause a significant negative impact on existing 
small businesses. Therefore, SBA is adopting the 750-employee size 
standard for all industries in NAICS Subsector 315, Apparel 
Manufacturing.

Comments on NAICS 327993, Mineral Wool Manufacturing

    A comment from a trade association for manufacturers of fiber glass 
and rock and slag wool insulation addressed the size standard for NAICS 
327993, Mineral Wool Manufacturing. Specifically, the association 
supported SBA's proposal to increase the size standard for NAICS 327993 
from 750 employees to 1,500 employees.

SBA's Response

    Because there were no comments opposed to this increase, SBA is 
adopting the 1,500 employee size standard for NAICS 327993, as 
proposed.

Comments on NAICS 336412, Aircraft Engine and Engine Parts 
Manufacturing; and NAICS 336413, Other Aircraft Part and Auxiliary 
Equipment Manufacturing

    SBA proposed increasing the size standards for NAICS 336412 from 
1,000 employees to 1,500 employees and for NAICS 336413 from 1,000 
employees to 1,250 employees. A military aircraft parts and auxiliary 
equipment manufacturer supported the proposed increases to size 
standards for both industries, but recommends that SBA adopt the same 
1,500-employee size standard for NAICS 336413 as well, instead of the 
proposed 1,250-employee size standard. The commenter argued that the 
differences in manufacturing engine parts and other aircraft equipment 
are minimal. The single size standard for both industries would provide 
uniform employee levels for small business eligibility and offer them 
more flexibility to adjust to the requirements of the marketplace, the 
commenter explained.

SBA's Response

    SBA has not adopted the recommendation for three reasons. First, 
although product lines and production methods may be related, there 
exist significant differences in industry characteristics between the 
two industries. For example, based on the 2007 Economic Census, the 
average size of firms is 230 employees for NAICS 336412 as compared to 
146 employees for NAICS 336413. Similarly, average assets size is about 
$74 million for NAICS 336412 as opposed to only $26 million for NAICS 
336413. Second, the

[[Page 4478]]

size standards for aircraft, aircraft parts and equipment related 
exceptions to NAICS 541712 (Research and Development in the Physical, 
Engineering and Life Sciences (except Biotechnology)) are tied to size 
standards for industries within NAICS Industry Group 3364 (Aerospace 
Product and Parts Manufacturing). Therefore, changing size standards 
for any of the industries in NAICS Industry Group 3364 would also 
require changing the size standards for exceptions under NAICS 541712. 
Third, the National Defense Authorization Act of fiscal year 2013 (NDAA 
2013) limits establishing a single or common size standard for multiple 
industries without proper justification and without publishing such a 
size standard for public comments. Obviously, given the industry data 
that support different size standards for the two industries, it would 
be difficult to justify the single size standard for them in accordance 
with NDAA 2013. As part of its quinquennial review of all size 
standards required by the Jobs Act, SBA will reevaluate the size 
standards for those industries in the coming years and consider the 
recommendation at that time.
    For the above reasons, in this final rule, SBA is adopting the 
1,500-employee size standard for NAICS 336412 and the 1,250-employee 
size standard for NAICS 336413, as proposed.

Comments on NAICS 611512, Flight Training

    A commenter supported increasing size standards for NAICS Sector 
31-33 manufacturing, specifically increasing the size standard for 
NAICS 336413 from 1,000 employees to 1,250 employees. The commenter, 
operating primarily in NAICS 611512 (Flight Training), advocated for 
the creation of a separate manufacturing NAICS code for ``Military 
Defense Training'' with a size standard of 1,500 employees. Contracting 
Officers have recently been utilizing NAICS 336413 for solicitations 
for services contracts involving military training due to its higher 
size standard and technical nature of military training, the commenter 
explained. NAICS 611512 and its $27.5 million receipts based size 
standard do not reflect the requirements for military defense training, 
the commenter added. The commenter argued that flight training can more 
realistically be categorized under NAICS Sector 31-33 (Manufacturing) 
rather than under Sector 61 (Education).

SBA's Response

    SBA cannot make the suggested change for several reasons. First, 
the September 10, 2014 proposed rule and this final rule only apply to 
industries in NAICS Sector 31-33, Manufacturing. The September 10, 2014 
proposed rule did not address NAICS 611512, Flight Training. SBA 
evaluated NAICS 611512 and its size standard in a proposed rule (76 FR 
70667 (November 15, 2011)) that was part of its comprehensive review of 
Sector 61, Educational Services. In the final rule, SBA determined that 
data did not support an increase in the size standard for NAICS 611512. 
The final rule (77 FR 58739 (September 24, 2012)) fully explains and 
justifies how SBA arrived at its determination that the then existing 
$25.5 million size standard for NAICS 611512 should remain unchanged. 
It was increased for inflation to $27.5 million, effective July 14, 
2014, along with increases to all other monetary based size standards 
(79 FR 33647 (June 12, 2014)).
    Second, SBA has no authority or expertise to create new NAICS codes 
or modify existing ones. Creating or modifying NAICS industry 
definitions or codes is done through the U.S. Economic Classification 
Policy Committee under the Office of Management and Budget (OMB) in 
cooperation with statistical agencies from the U.S., Canada, and 
Mexico. If the commenter believes that a new NAICS code is warranted 
for military flight training, it should approach OMB (see http://www.census.gov/eos/www/naics/). Every five years, OMB updates NAICS 
codes and definitions, the next being the NAICS 2017 updates.
    For Federal procurement, the contracting officer must specify the 
NAICS code and size standard in accordance with the principal purpose 
of the procurement (13 CFR 121.402(b)). When the government purchases 
manufactured products, the contracting officer must assign the 
appropriate NAICS code and size standard from Sector 31-33. There may 
be ancillary services that accompany the manufactured product, but if 
the principal purpose of the procurement action is to purchase product, 
then the NAICS code and small business size standard are from the 
manufacturing sector. If a service is the primary purpose of the 
procurement, it should be classified under the appropriate services 
NAICS code and size standard. When the government procures both 
products and services, it must determine which is the greater part of 
the contract, and must assign the appropriate NAICS code and size 
standard (13 CFR 121.402(b)). Any interested party adversely affected 
by a contracting officer's NAICS code designation may appeal that 
designation to SBA's Office of Hearings and Appeals (OHA) (see 13 CFR 
121.1101-1103).

Comments on NAICS 321212, Softwood Veneer and Plywood Manufacturing

    A commenter opposed SBA's proposal to increase the size standard 
for Softwood Veneer and Plywood Manufacturing (NAICS 321212) from 500 
employees to 1,250 employees. The commenter maintained that the 
increase would have an impact on the majority of manufacturers in this 
industry by affecting the availability of Federal timber, because it 
would increase the competition for the timber sale set aside for small 
businesses in this industry by enlarging the pool of eligible small 
business manufacturers. The commenter argued that the proposed size 
standard increase is not warranted because companies that qualify as 
small under the current size standard already exist. The commenter was 
concerned that by allowing larger companies to qualify as small the 
proposed increase to the size standard for NAICS 321212 would 
negatively impact a number of companies that have made business 
decisions to remain below the 500-employee size standard to benefit 
from the SBA's timber set-aside program. With the proposed 1,250-
employee size standard, the plywood and veneer manufacturers below 500 
employees would lose the protection provided by the program, the 
commenter concluded.

SBA's Response

    With respect to the argument that an increase to the size standard 
for NAICS 321212 or any other wood product manufacturing industry would 
negatively impact firms participating in the SBA's Commercial Timber 
Sale Set-Aside Program, the wood manufacturing industry size standards 
do not apply to determine eligibility for purposes of that program. 
Rather, the size standard for the timber sale set-aside program (except 
for salvage timber) is 500 employees (see 13 CFR 121.507), which SBA 
did not propose to increase.
    The arguments that there are already small businesses under the 
existing size standard, that firms have made business decisions to 
remain small to benefit from the program, and that they would lose 
small business protection if additional firms qualify as small, are not 
valid reasons for not revising the size standard when the relevant 
industry data warrants doing so. Of the 14 industries in NAICS 
Subsector 321, Wood Product Manufacturing, based on

[[Page 4479]]

the results of the evaluation of industry characteristics (such as 
average firm size, industry concentration, and distribution of firms by 
size) and the Federal contracting factor, SBA proposed increasing the 
size standards for NAICS 321212 and four others, and retaining the 
current 500-employee size standard for nine industries. As can be seen 
from the results in Table 3 of the September 10, 2014 proposed rule, 
the industries for which SBA proposed increasing the size standards had 
significantly higher average firm size, four-firm concentration ratio 
and Gini coefficient than others. To still maintain their size standard 
at the 500-employee level would be inconsistent with SBA's mandate to 
adjust size standards based on current industry and market data. 
Moreover, based on the Economic Census and SAM data for NAICS 321212, 
only about five additional firms will qualify as small under the 1,250-
employee size standard, suggesting that the higher size standard will 
have very minimal impact on businesses below the current 500-employee 
size standard. For these reasons, SBA is adopting the 1,250-employee 
size standard for NAICS 321212, as proposed. Similarly, SBA is adopting 
proposed size standards increases for four other industries in 
Subsector 321.

Other Comments

    Two commenters offered general assessments of SBA's proposed rule. 
Both supported SBA's proposed five employee based size standard levels 
for Manufacturing and their incremental increases of 250 employees 
rather than 500 employees; however, one suggested that SBA should 
incorporate the sixth level at 250 employees and set the maximum 
employee based standard at 1,000 employees. A lower size standard would 
protect emerging manufacturers that are not able to compete with 
established larger businesses, the commenter explained. One opposed 
proposed increases to size standards in Manufacturing arguing that 
higher size standards would allow manufacturers to create less 
productive, low paying jobs, while the other commenter supported the 
increases except for industries in Subsector 315 for which the 
commenter suggested a lower 250-employee size standard.
    Both commenters argued that the Agency should lower size standards 
when the analysis supports lowering them. One argued that not lowering 
size standards would encourage manufacturers not to upgrade their 
facilities with advanced manufacturing techniques and allow larger 
manufacturers to compete with true small manufacturers. While one 
commenter suggested that SBA should not adjust employee based size 
standards for labor productivity growth and focus on protecting 
emerging businesses instead, the other pointed out that the lack of 
data on labor productivity would make adjusting size standards based on 
labor productivity difficult. One commenter supported weighing all 
factors equally, while the other suggested weighing some factors more 
than others for certain industries. In addition to employee counts, the 
second commenter suggested other criteria for establishing size 
standards, including business tenure (5 years), subcontracting 
limitations, revenue limits ($30 million), and net worth limits ($5 
million). Lastly, both commenters endorsed SBA's approach to use a 
single value as a size standard as opposed to a range of values.

SBA's Response

    Some of the issues the commenters have raised (such as lowering 
minimum and maximum size standards, using different factors and 
weighing them differently from others, lowering size standards, etc.) 
will be addressed when SBA updates its ``Size Standards Methodology'' 
for the next round of size standards review. With respect to SBA's 
policy of not lowering size standards when the data support doing so, 
SBA provided a detailed explanation in the proposed rule with respect 
to why lowering size standards is not in the best interest of small 
businesses in the current economic climate. SBA is concerned that 
lowering maximum and minimum levels of size standards would cause 
untold numbers of small businesses to lose their eligibility for 
Federal programs.
    Incorporation of net worth into SBA's table of size standards is 
not practicable. It is not a value that lends itself to comparing 
businesses in a particular industry. A company's net worth can be 
affected by a number of things, such as debt, repurchased corporate 
stock, etc. Furthermore, data on net worth is not available by 
industry.
    Other criteria proposed by the commenter would, SBA believes, be 
too nebulous, temporary, and subjective and therefore not useful when 
establishing size standards that usually must remain static and in 
place for a number of years. Establishing small business eligibility 
based on multiple criteria (such as revenue limit, net worth limit, and 
employee count), as suggested by the commenter, would create 
unnecessary complexity and confusion in size standards.

NAICS 326211, Tire Manufacturing (Except Retreading)

    In the September 10, 2014 proposed rule, SBA proposed amending 
Footnote 5 to the table of size standards relating to NAICS 326211, 
Tire Manufacturing (except Retreading). In the absence of comments 
opposing the proposed amendment, SBA is amending Footnote 5, as 
proposed, by replacing the former Census classification codes 30111 and 
30112 with the new Census Product Classification Codes 3262111 and 
3262113 respectively.

Conclusions

    Based on the analyses of the latest industry and Federal 
contracting data available and thorough evaluation of all public 
comments on the proposed rule, SBA is adopting all size standards 
changes in NAICS Sector 31-33, Manufacturing, as proposed. 
Specifically, SBA is increasing size standards for 209 industries in 
NAICS Sector 31-33. These industries, along with their current and 
revised size standards are shown in Table 3 ``Summary of Size Standards 
Revisions in NAICS Sector 31-33.'' SBA is also increasing the refining 
capacity component of the size standard for NAICS 324110 (Petroleum 
Refiners) from 125,000 barrels per calendar day (BPCD) to 200,000 BPCD 
for businesses that are primarily engaged in petroleum refining and 
eliminating the requirement that 90 percent of the output to be 
delivered be refined by the successful bidder from either crude oil or 
bona fide feedstocks. To qualify under the capacity size standard, the 
firm, together with its affiliates, must be primarily engaged in 
refining crude petroleum into refined petroleum products. To reflect 
these changes, SBA is also amending Footnote 4 of SBA's table of size 
standards. Finally, the Agency is also updating Footnote 5 to NAICS 
326211 to reflect the current Census Product Classification Codes 
3262111 and 3262113.

[[Page 4480]]



   Table 3--Summary of Size Standards Revisions in NAICS Sector 31-33
------------------------------------------------------------------------
                                           Current size    Revised size
                    NAICS U.S. industry      standard        standard
    NAICs code             title            (number of      (number of
                                            employees)      employees)
------------------------------------------------------------------------
311111...........  Dog and Cat Food                  500           1,000
                    Manufacturing.
311211...........  Flour Milling........             500           1,000
311221...........  Wet Corn Milling.....             750           1,250
311314...........  Cane Sugar                        750           1,000
                    Manufacturing.
311340...........  Nonchocolate                      500           1,000
                    Confectionery
                    Manufacturing.
311351...........  Chocolate and                     500           1,250
                    Confectionery
                    Manufacturing from
                    Cacao Beans.
311352...........  Confectionery                     500           1,000
                    Manufacturing from
                    Purchased Chocolate.
311411...........  Frozen Fruit, Juice,              500           1,000
                    and Vegetable
                    Manufacturing.
311412...........  Frozen Specialty Food             500           1,250
                    Manufacturing.
311421...........  Fruit and Vegetable               500           1,000
                    Canning.
311422...........  Specialty Canning....           1,000           1,250
311423...........  Dried and Dehydrated              500             750
                    Food Manufacturing.
311511...........  Fluid Milk                        500           1,000
                    Manufacturing.
311512...........  Creamery Butter                   500             750
                    Manufacturing.
311513...........  Cheese Manufacturing.             500           1,250
311514...........  Dry, Condensed, and               500             750
                    Evaporated Dairy
                    Product
                    Manufacturing.
311520...........  Ice Cream and Frozen              500           1,000
                    Dessert
                    Manufacturing.
311611...........  Animal (except                    500           1,000
                    Poultry)
                    Slaughtering.
311612...........  Meat Processed from               500           1,000
                    Carcasses.
311613...........  Rendering and Meat                500             750
                    Byproduct Processing.
311615...........  Poultry Processing...             500           1,250
311710...........  Seafood Product                   500             750
                    Preparation and
                    Packaging.
311812...........  Commercial Bakeries..             500           1,000
311813...........  Frozen Cakes, Pies,               500             750
                    and Other Pastries
                    Manufacturing.
311821...........  Cookie and Cracker                750           1,250
                    Manufacturing.
311824...........  Dry Pasta, Dough, and             500             750
                    Flour Mixes
                    Manufacturing from
                    Purchased Flour.
311830...........  Tortilla                          500           1,250
                    Manufacturing.
311911...........  Roasted Nuts and                  500             750
                    Peanut Butter
                    Manufacturing.
311919...........  Other Snack Food                  500           1,250
                    Manufacturing.
311920...........  Coffee and Tea                    500             750
                    Manufacturing.
311930...........  Flavoring Syrup and               500           1,000
                    Concentrate
                    Manufacturing.
311941...........  Mayonnaise, Dressing,             500             750
                    and Other Prepared
                    Sauce Manufacturing.
312111...........  Soft Drink                        500           1,250
                    Manufacturing.
312112...........  Bottled Water                     500           1,000
                    Manufacturing.
312113...........  Ice Manufacturing....             500             750
312120...........  Breweries............             500           1,250
312130...........  Wineries.............             500           1,000
312140...........  Distilleries.........             750           1,000
312230...........  Tobacco Manufacturing           1,000           1,500
313110...........  Fiber, Yarn, and                  500           1,250
                    Thread Mills.
313230...........  Nonwoven Fabric Mills             500             750
314110...........  Carpet and Rug Mills.             500           1,500
314120...........  Curtain and Linen                 500             750
                    Mills.
315110...........  Hosiery and Sock                  500             750
                    Mills.
315190...........  Other Apparel                     500             750
                    Knitting Mills.
315210...........  Cut and Sew Apparel               500             750
                    Contractors.
315220...........  Men's and Boys' Cut               500             750
                    and Sew Apparel
                    Manufacturing.
315240...........  Women's, Girls', and              500             750
                    Infants' Cut and Sew
                    Apparel
                    Manufacturing.
315280...........  Other Cut and Sew                 500             750
                    Apparel
                    Manufacturing.
316992...........  Women's Handbag and               500             750
                    Purse Manufacturing.
321212...........  Softwood Veneer and               500           1,250
                    Plywood
                    Manufacturing.
321213...........  Engineered Wood                   500             750
                    Member (except
                    Truss) Manufacturing.
321219...........  Reconstituted Wood                500             750
                    Product
                    Manufacturing.
321911...........  Wood Window and Door              500           1,000
                    Manufacturing.
321991...........  Manufactured Home                 500           1,250
                    (Mobile Home)
                    Manufacturing.
322121...........  Paper (except                     750           1,250
                    Newsprint) Mills.
322130...........  Paperboard Mills.....             750           1,250
322211...........  Corrugated and Solid              500           1,250
                    Fiber Box
                    Manufacturing.
322219...........  Other Paperboard                  750           1,000
                    Container
                    Manufacturing.
322220...........  Paper Bag and Coated              500             750
                    and Treated Paper
                    Manufacturing.
322230...........  Stationery Product                500             750
                    Manufacturing.
322291...........  Sanitary Paper                    500           1,500
                    Product
                    Manufacturing.
323117...........  Books Printing.......             500           1,250
324191...........  Petroleum Lubricating             500             750
                    Oil and Grease
                    Manufacturing.
325194...........  Cyclic Crude,                     750           1,250
                    Intermediate, and
                    Gum and Wood
                    Chemical
                    Manufacturing.
325199...........  All Other Basic                 1,000           1,250
                    Organic Chemical
                    Manufacturing.
325211...........  Plastics Material and             750           1,250
                    Resin Manufacturing.
325312...........  Phosphatic Fertilizer             500             750
                    Manufacturing.
325320...........  Pesticide and Other               500           1,000
                    Agricultural
                    Chemical
                    Manufacturing.

[[Page 4481]]

 
325411...........  Medicinal and                     750           1,000
                    Botanical
                    Manufacturing.
325412...........  Pharmaceutical                    750           1,250
                    Preparation
                    Manufacturing.
325413...........  In-Vitro Diagnostic               500           1,250
                    Substance
                    Manufacturing.
325414...........  Biological Product                500           1,250
                    (except Diagnostic)
                    Manufacturing.
325510...........  Paint and Coating                 500           1,000
                    Manufacturing.
325611...........  Soap and Other                    750           1,000
                    Detergent
                    Manufacturing.
325612...........  Polish and Other                  500             750
                    Sanitation Good
                    Manufacturing.
325613...........  Surface Active Agent              500             750
                    Manufacturing.
325620...........  Toilet Preparation                500           1,250
                    Manufacturing.
325992...........  Photographic Film,                500           1,500
                    Paper, Plate, and
                    Chemical
                    Manufacturing.
326111...........  Plastics Bag and                  500             750
                    Pouch Manufacturing.
326112...........  Plastics Packaging                500           1,000
                    Film and Sheet
                    (including
                    Laminated)
                    Manufacturing.
326113...........  Unlaminated Plastics              500             750
                    Film and Sheet
                    (except Packaging)
                    Manufacturing.
326122...........  Plastics Pipe and                 500             750
                    Pipe Fitting
                    Manufacturing.
326140...........  Polystyrene Foam                  500           1,000
                    Product
                    Manufacturing.
326150...........  Urethane and Other                500             750
                    Foam Product (except
                    Polystyrene)
                    Manufacturing.
326160...........  Plastics Bottle                   500           1,250
                    Manufacturing.
326191...........  Plastics Plumbing                 500             750
                    Fixture
                    Manufacturing.
326211...........  Tire Manufacturing              1,000           1,500
                    (except Retreading).
326220...........  Rubber and Plastics               500             750
                    Hoses and Belting
                    Manufacturing.
326291...........  Rubber Product                    500             750
                    Manufacturing for
                    Mechanical Use.
327110...........  Pottery, Ceramics,                750           1,000
                    and Plumbing Fixture
                    Manufacturing.
327212...........  Other Pressed and                 750           1,250
                    Blown Glass and
                    Glassware
                    Manufacturing.
327213...........  Glass Container                   750           1,250
                    Manufacturing.
327215...........  Glass Product                     500           1,000
                    Manufacturing Made
                    of Purchased Glass.
327310...........  Cement Manufacturing.             750           1,000
327332...........  Concrete Pipe                     500             750
                    Manufacturing.
327410...........  Lime Manufacturing...             500             750
327420...........  Gypsum Product                  1,000           1,500
                    Manufacturing.
327910...........  Abrasive Product                  500             750
                    Manufacturing.
327993...........  Mineral Wool                      750           1,500
                    Manufacturing.
331110...........  Iron and Steel Mills            1,000           1,500
                    and Ferroalloy
                    Manufacturing.
331315...........  Aluminum Sheet,                   750           1,250
                    Plate, and Foil
                    Manufacturing.
331511...........  Iron Foundries.......             500           1,000
331512...........  Steel Investment                  500           1,000
                    Foundries.
332111...........  Iron and Steel                    500             750
                    Forging.
332112...........  Nonferrous Forging...             500             750
332215...........  Metal Kitchen                     500             750
                    Cookware, Utensil,
                    Cutlery, and
                    Flatware (except
                    Precious)
                    Manufacturing.
332216...........  Saw Blade and                     500             750
                    Handtool
                    Manufacturing.
332311...........  Prefabricated Metal               500             750
                    Building and
                    Component
                    Manufacturing.
332313...........  Plate Work                        500             750
                    Manufacturing.
332321...........  Metal Window and Door             500             750
                    Manufacturing.
332410...........  Power Boiler and Heat             500             750
                    Exchanger
                    Manufacturing.
332420...........  Metal Tank (Heavy                 500             750
                    Gauge) Manufacturing.
332431...........  Metal Can                       1,000           1,500
                    Manufacturing.
332510...........  Hardware                          500             750
                    Manufacturing.
332911...........  Industrial Valve                  500             750
                    Manufacturing.
332912...........  Fluid Power Valve and             500           1,000
                    Hose Fitting
                    Manufacturing.
332913...........  Plumbing Fixture                  500           1,000
                    Fitting and Trim
                    Manufacturing.
332919...........  Other Metal Valve and             500             750
                    Pipe Fitting
                    Manufacturing.
332991...........  Ball and Roller                   750           1,250
                    Bearing
                    Manufacturing.
332992...........  Small Arms Ammunition           1,000           1,250
                    Manufacturing.
333111...........  Farm Machinery and                500           1,250
                    Equipment
                    Manufacturing.
333112...........  Lawn and Garden                   500           1,500
                    Tractor and Home
                    Lawn and Garden
                    Equipment
                    Manufacturing.
333120...........  Construction                      750           1,250
                    Machinery
                    Manufacturing.
333132...........  Oil and Gas Field                 500           1,250
                    Machinery and
                    Equipment
                    Manufacturing.
333242...........  Semiconductor                     500           1,500
                    Machinery
                    Manufacturing.
333244...........  Printing Machinery                500             750
                    and Equipment
                    Manufacturing.
333415...........  Air-Conditioning and              750           1,250
                    Warm Air Heating
                    Equipment and
                    Commercial and
                    Industrial
                    Refrigeration
                    Equipment
                    Manufacturing.
333611...........  Turbine and Turbine             1,000           1,500
                    Generator Set Units
                    Manufacturing.
333612...........  Speed Changer,                    500             750
                    Industrial High-
                    Speed Drive, and
                    Gear Manufacturing.
333613...........  Mechanical Power                  500             750
                    Transmission
                    Equipment
                    Manufacturing.
333618...........  Other Engine                    1,000           1,500
                    Equipment
                    Manufacturing.
333911...........  Pump and Pumping                  500             750
                    Equipment
                    Manufacturing.
333912...........  Air and Gas                       500           1,000
                    Compressor
                    Manufacturing.
333913...........  Measuring and                     500             750
                    Dispensing Pump
                    Manufacturing.
333921...........  Elevator and Moving               500           1,000
                    Stairway
                    Manufacturing.
333923...........  Overhead Traveling                500           1,250
                    Crane, Hoist, and
                    Monorail System
                    Manufacturing.

[[Page 4482]]

 
333992...........  Welding and Soldering             500           1,250
                    Equipment
                    Manufacturing.
333995...........  Fluid Power Cylinder              500             750
                    and Actuator
                    Manufacturing.
333996...........  Fluid Power Pump and              500           1,250
                    Motor Manufacturing.
334111...........  Electronic Computer             1,000           1,250
                    Manufacturing.
334112...........  Computer Storage                1,000           1,250
                    Device Manufacturing.
334210...........  Telephone Apparatus             1,000           1,250
                    Manufacturing.
334220...........  Radio and Television              750           1,250
                    Broadcasting and
                    Wireless
                    Communications
                    Equipment
                    Manufacturing.
334412...........  Bare Printed Circuit              500             750
                    Board Manufacturing.
334413...........  Semiconductor and                 500           1,250
                    Related Device
                    Manufacturing.
334417...........  Electronic Connector              500           1,000
                    Manufacturing.
334418...........  Printed Circuit                   500             750
                    Assembly (Electronic
                    Assembly)
                    Manufacturing.
334510...........  Electromedical and                500           1,250
                    Electrotherapeutic
                    Apparatus
                    Manufacturing.
334511...........  Search, Detection,                750           1,250
                    Navigation,
                    Guidance,
                    Aeronautical, and
                    Nautical System and
                    Instrument
                    Manufacturing.
334513...........  Instruments and                   500             750
                    Related Products
                    Manufacturing for
                    Measuring,
                    Displaying, and
                    Controlling
                    Industrial Process
                    Variables.
334514...........  Totalizing Fluid                  500             750
                    Meter and Counting
                    Device Manufacturing.
334515...........  Instrument                        500             750
                    Manufacturing for
                    Measuring and
                    Testing Electricity
                    and Electrical
                    Signals.
334516...........  Analytical Laboratory             500           1,000
                    Instrument
                    Manufacturing.
334517...........  Irradiation Apparatus             500           1,000
                    Manufacturing.
334614...........  Software and Other                750           1,250
                    Prerecorded Compact
                    Disc, Tape, and
                    Record Reproducing.
335110...........  Electric Lamp Bulb              1,000           1,250
                    and Part
                    Manufacturing.
335121...........  Residential Electric              500             750
                    Lighting Fixture
                    Manufacturing.
335210...........  Small Electrical                  750           1,500
                    Appliance
                    Manufacturing.
335221...........  Household Cooking                 750           1,500
                    Appliance
                    Manufacturing.
335222...........  Household                       1,000           1,250
                    Refrigerator and
                    Home Freezer
                    Manufacturing.
335224...........  Household Laundry               1,000           1,250
                    Equipment
                    Manufacturing.
335228...........  Other Major Household             500           1,000
                    Appliance
                    Manufacturing.
335312...........  Motor and Generator             1,000           1,250
                    Manufacturing.
335313...........  Switchgear and                    750           1,250
                    Switchboard
                    Apparatus
                    Manufacturing.
335911...........  Storage Battery                   500           1,250
                    Manufacturing.
335932...........  Noncurrent-Carrying               500           1,000
                    Wiring Device
                    Manufacturing.
336111...........  Automobile                      1,000           1,500
                    Manufacturing.
336112...........  Light Truck and                 1,000           1,500
                    Utility Vehicle
                    Manufacturing.
336120...........  Heavy Duty Truck                1,000           1,500
                    Manufacturing.
336212...........  Truck Trailer                     500           1,000
                    Manufacturing.
336213...........  Motor Home                      1,000           1,250
                    Manufacturing.
336214...........  Travel Trailer and                500           1,000
                    Camper Manufacturing.
336310...........  Motor Vehicle                     750           1,000
                    Gasoline Engine and
                    Engine Parts
                    Manufacturing.
336320...........  Motor Vehicle                     750           1,000
                    Electrical and
                    Electronic Equipment
                    Manufacturing.
336330...........  Motor Vehicle                     750           1,000
                    Steering and
                    Suspension
                    Components (except
                    Spring)
                    Manufacturing.
336340...........  Motor Vehicle Brake               750           1,250
                    System Manufacturing.
336350...........  Motor Vehicle                     750           1,500
                    Transmission and
                    Power Train Parts
                    Manufacturing.
336360...........  Motor Vehicle Seating             500           1,500
                    and Interior Trim
                    Manufacturing.
336370...........  Motor Vehicle Metal               500           1,000
                    Stamping.
336390...........  Other Motor Vehicle               750           1,000
                    Parts Manufacturing.
336412...........  Aircraft Engine and             1,000           1,500
                    Engine Parts
                    Manufacturing.
336413...........  Other Aircraft Parts            1,000           1,250
                    and Auxiliary
                    Equipment
                    Manufacturing.
336414...........  Guided Missile and              1,000           1,250
                    Space Vehicle
                    Manufacturing.
336415...........  Guided Missile and              1,000           1,250
                    Space Vehicle
                    Propulsion Unit and
                    Propulsion Unit
                    Parts Manufacturing.
336510...........  Railroad Rolling                1,000           1,500
                    Stock Manufacturing.
336611...........  Ship Building and               1,000           1,250
                    Repairing.
336612...........  Boat Building........             500           1,000
336991...........  Motorcycle, Bicycle,              500           1,000
                    and Parts
                    Manufacturing.
336992...........  Military Armored                1,000           1,500
                    Vehicle, Tank, and
                    Tank Component
                    Manufacturing.
336999...........  All Other                         500           1,000
                    Transportation
                    Equipment
                    Manufacturing.
337110...........  Wood Kitchen Cabinet              500             750
                    and Countertop
                    Manufacturing.
337121...........  Upholstered Household             500           1,000
                    Furniture
                    Manufacturing.
337122...........  Nonupholstered Wood               500             750
                    Household Furniture
                    Manufacturing.
337124...........  Metal Household                   500             750
                    Furniture
                    Manufacturing.
337125...........  Household Furniture               500             750
                    (except Wood and
                    Metal) Manufacturing.
337211...........  Wood Office Furniture             500           1,000
                    Manufacturing.
337214...........  Office Furniture                  500           1,000
                    (except Wood)
                    Manufacturing.
337910...........  Mattress                          500           1,000
                    Manufacturing.
337920...........  Blind and Shade                   500           1,000
                    Manufacturing.
339112...........  Surgical and Medical              500           1,000
                    Instrument
                    Manufacturing.
339113...........  Surgical Appliance                500             750
                    and Supplies
                    Manufacturing.
339114...........  Dental Equipment and              500             750
                    Supplies
                    Manufacturing.
339115...........  Ophthalmic Goods                  500           1,000
                    Manufacturing.

[[Page 4483]]

 
339920...........  Sporting and Athletic             500             750
                    Goods Manufacturing.
339940...........  Office Supplies                   500             750
                    (except Paper)
                    Manufacturing.
339992...........  Musical Instrument                500           1,000
                    Manufacturing.
339993...........  Fastener, Button,                 500             750
                    Needle, and Pin
                    Manufacturing.
339995...........  Burial Casket                     500           1,000
                    Manufacturing.
------------------------------------------------------------------------

Evaluation of 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: (1) Is independently owned and 
operated; (2) is not dominant in its field of operation; and (3) meets 
a specific small business definition or size standard established by 
SBA's Administrator. SBA considers as part of its evaluation whether a 
business concern at a proposed or revised size standard would be 
dominant in its field of operation. SBA has determined that for the 
industries for which it has revised size standards in this final rule, 
no individual firm at or below the revised size standard will be large 
enough to dominate its field of operation. At the revised size 
standards that are adopted in this final rule, the small business share 
of total industry receipts among those industries for which SBA has 
revised size standards is, on average, 1.7 percent, ranging from a 
minimum of 0.02 percent to a maximum of 18.9 percent. SBA determines 
that these market shares effectively preclude a firm at or below the 
revised size standards from exerting control on any of the industries.

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 a significant regulatory action for purposes of Executive 
Order 12866. Accordingly, in the next section SBA provides a Regulatory 
Impact Analysis of this rule. However, this rule is not a ``major 
rule'' under the Congressional Review Act, 5 U.S.C. 800.

Regulatory Impact Analysis

1. Is there a need for the regulatory action?

    SBA believes that the size standards revisions in this rule are a 
better reflection of the economic characteristics of small businesses 
and the Federal government marketplace in the affected industries. 
SBA's mission is to aid and assist small businesses through a variety 
of financial, procurement, business development, and advocacy programs. 
To determine the intended beneficiaries of these programs, SBA 
establishes distinct definitions of which businesses are deemed small 
businesses. The Small Business Act (15 U.S.C. 632(a)) delegates to 
SBA's Administrator the responsibility for establishing small business 
definitions. The Act also requires that small business definitions vary 
to reflect industry differences. The Jobs Act further requires SBA to 
review all size standards and make necessary adjustments to reflect 
market conditions. The supplementary information section of this 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 affected by this rule is 
their gaining or maintaining 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), economically 
disadvantaged women-owned small businesses (EDWOSB), and service-
disabled veteran-owned small businesses (SDVOSB). Federal agencies may 
also use SBA's size standards for a variety of other regulatory and 
program purposes. These programs assist small businesses to become more 
knowledgeable, stable, and competitive. SBA estimates that in the 209 
industries for which it is increasing size standards about 1,250 firms, 
not small under the current size standards, will become small and 
therefore eligible for these programs. That is about 0.4 percent of all 
firms classified as small under the current size standards in all 
industries that SBA reviewed for the September 10, 2014 proposed rule 
and this final rule. SBA anticipates that the small business share of 
total receipts in those industries will increase from 26 percent to 29 
percent.
    Four groups can benefit from the revised size standards: (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; (3) Federal agencies that will have a 
larger pool of small businesses from which to draw for their small 
business procurement programs; and, (4) wholesalers and dealers that 
sell products to the Federal government as small businesses under the 
nonmanufacturer rule (13 CFR 121.406(b)) will have additional sources 
of goods to fill their orders.
    SBA estimates that firms gaining small business status under the 
revised size standards might receive Federal contracts totaling $150 
million to $160 million annually under SBA's small business, 8(a), SDB, 
HUBZone, WOSB, EDWOSB, and SDVOSB Programs, as well as 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.
    SBA provides financial assistance to small businesses under its 
7(a) and 504 Loan Programs. Under SBA's 7(a) and 504 Loan Programs, 
based on the fiscal years 2012-2014 data, SBA estimates approximately 
20 to 25 SBA loans

[[Page 4484]]

totaling about $10 million to $15.0 million could be made to these 
newly defined small businesses under the revised size standards. 
However, it is impractical to try to estimate the number and total 
amount of loans with any precision. There are two reasons for this: (1) 
Under the Jobs Act, SBA can now guarantee substantially larger loans 
than in the past; and (2) as described above, the Jobs Act established 
a higher 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.
    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 a disaster in the future, 
SBA cannot make a meaningful estimate of this impact.
    In addition, newly defined small businesses will also benefit 
through reduced fees, less paperwork, and fewer compliance requirements 
that are available to small businesses throughout the Federal 
government.
    To the extent that 1,250 newly defined small firms may become 
active in Federal procurement programs, the revised size standards 
might also add administrative costs to the government because there are 
now more businesses eligible for Federal small business programs. For 
example, there will be more firms seeking SBA's guaranteed loans, more 
firms eligible for enrollment in the SAM database, and more firms 
seeking certification as 8(a) or HUBZone firms or qualifying for small 
business, WOSB, EDWOSB, SDVOSB, and SDB status. Among those newly 
defined small businesses seeking Federal assistance, there could be 
additional costs associated with compliance and verification of small 
business status and administration of size protests. However, SBA 
believes that these added administrative costs will be minimal because 
there are mechanisms in place to handle these requirements.
    Additionally, some Federal government contracts might have higher 
costs. With a greater number of businesses defined as small under the 
revised size standards, Federal agencies may set aside more contracts 
to small businesses, rather than use 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. However, the 
additional costs associated with fewer bidders are expected to be minor 
since, by law, procurements may be set aside 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. In 
addition, there may be higher costs when more full and open contracts 
are awarded to HUBZone businesses that receive price evaluation 
preferences.
    Revised size standards might have distributional effects among 
large and small business contractors. 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. Some 
Federal contracts may be transferred to small businesses from large 
businesses. Large businesses may have fewer Federal contract 
opportunities as Federal agencies decide to set aside more contracts 
for small businesses. In addition, some Federal contracts may be 
awarded to HUBZone concerns instead of large businesses since they are 
eligible for price evaluation preferences when they compete on a full 
and open basis.
    Similarly, some businesses defined small under the current size 
standards may receive fewer Federal contracts due to increased 
competition from more businesses now defined as small under higher size 
standards. This transfer may be offset by a greater number of small 
business set-aside procurements. 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 from 
large and currently defined small businesses. Because there are so many 
variables affecting the Federal market, SBA cannot estimate the 
potential distributional impacts of these transfers with any degree of 
precision.
    The increased size standards for 209 industries and the 
modification of the size standard for NAICS 324110 in Sector 31-33 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

    Descriptions 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 in the 
Regulatory Impact Analysis under Executive Order 12866, above.
    In an effort to engage interested parties in this action, SBA 
presented its size standards methodology (discussed above under 
Supplementary Information) to various industry associations and trade 
groups. SBA also met with a number of industry groups and individual 
businesses to get their feedback on its methodology and other size 
standards issues. The Agency additionally conferred with Federal 
procurement officials that purchase products manufactured by a number 
of industries for which SBA proposed to increase size standards. In 
addition, as part of its Jobs Act tour SBA presented its size standards 
methodology to businesses in 13 cities in the U.S. and sought their 
input. The presentations 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.
    Moreover, 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 size 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 rule.
    Finally, the SBA has maintained a roster of parties (government and 
industry) that have expressed interest in various manufacturing 
industries over the last few years, and sent each of them a copy of the 
September 10, 2014 proposed rule to assure they had ample time and 
opportunity to provide comments.
    Increasing size standards for the industries covered in this rule 
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

[[Page 4485]]

standards were limited to a few specific industries in response to 
requests from the public and from Federal agencies. The majority of 
employee based size standards, including those in NAICS Sector 31-33, 
have not been reviewed since they were first established. 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 to 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 purposes of Executive Order 13132, SBA has determined that this 
rule has no 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 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 rule imposes no new reporting or record 
keeping requirements.

Final Regulatory Flexibility Analysis

    Under the Regulatory Flexibility Act (RFA), this rule may have a 
significant impact on a substantial number of small businesses in the 
industries covered by this rule. As described above, this rule may 
affect small businesses seeking Federal contracts, loans under SBA's 
7(a), 504 and Economic Injury Disaster Loan Programs, and assistance 
under other Federal small business programs.
    Immediately below, SBA sets forth a final regulatory flexibility 
analysis (FRFA) of this 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 applies? (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?

    Changes in industry structure, technological changes, productivity 
growth, mergers and acquisitions, and updated industry definitions have 
changed the structure of many industries reviewed in the September 10, 
2014 proposed rule and this final rule. Such changes can be sufficient 
to warrant revisions to current size standards for some industries. 
Based on the analysis of the latest data available, SBA believes that 
the revised size standards in this rule more appropriately reflect the 
size of businesses that need Federal assistance. The 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?

    SBA estimates that about 1,250 additional firms will become small 
because of revised size standards for 209 industries in NAICS Sector 
31-33. That represents 0.4 percent of total firms that are small under 
current size standards in all industries in that Sector. This will 
result in an increase in the small business share of total industry 
receipts in Sector 31-33 from 26 percent under the current size 
standards to 29 percent under the size standards adopted in this final 
rule. The revised size standards will enable more small businesses to 
retain their small business status for a longer period and many others 
to regain small business status that may have exceeded current size 
standards, making it difficult for them to compete with companies that 
are significantly larger than they are. SBA believes that the overall 
impact of this rule will be positive for existing small businesses, as 
well as for those that exceed the current size standards but are on the 
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 
a small business concern. That is, entities that do not meet SBA's 
small business size standards are considered ``other than small.''

3. What are the projected reporting, record keeping and other 
compliance requirements of the rule?

    The size standard changes impose no additional reporting or record 
keeping requirements on small businesses. However, qualifying for 
Federal procurement and a number of other programs requires that 
businesses register in the SAM database and certify in SAM that they 
are small at least once annually. Therefore, businesses opting to 
participate in those programs must comply with SAM requirements. 
Additionally, businesses affected by the changes, if they are already 
registered in SAM, must update their certifications and affirmations. 
However, there are no costs associated with SAM registration or 
certification. Changing size standards alters access to SBA's programs 
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 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 ``Table of 
Statutory and Regulatory Size Standards Set by Agencies Other than 
SBA'' (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 for purposes of compliance with that Act, after 
consultation with the Office of Advocacy of the U.S. Small Business 
Administration (5 U.S.C. 601(3)).

[[Page 4486]]

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 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 the 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, and 694a(9).
    2. Amend Sec.  121.201 in the table ``Small Business Size Standards 
by NAICS Industry'' as follows:
    a. Revise the entries for ``311111'', ``311211'', ``311221'', 
``311314'', ``311340'', ``311351'', ``311352'', ``311411'', ``311412'', 
``311421'', ``311422'', ``311423'', ``311511'', ``311512'', ``311513'', 
``311514'', ``311520'', ``311611'', ``311612'', ``311613'', ``311615'', 
``311710'', ``311812'', ``311813'', ``311821'', ``311824'', ``311830'', 
``311911'', ``311919'', ``311920'', ``311930'', ``311941'', ``312111'', 
``312112'', ``312113'', ``312120'', ``312130'', ``312140'', ``312230'', 
``313110'', ``313230'', ``314110'', ``314120'', ``315110'', ``315190'', 
``315210'', ``315220'', ``315240'', ``315280'', ``316992'', ``321212'', 
``321213'', ``321219'', ``321911'', ``321991'', ``322121'', ``322130'', 
``322211'', ``322219'', ``322220'', ``322230'', ``322291'', ``323117'', 
``324110'', ``324191'', ``325194'', ``325199'', ``325211'', ``325312'', 
``325320'', ``325411'', ``325412'', ``325413'', ``325414'', ``325510'', 
``325611'', ``325612'', ``325613'', ``325620'', ``325992'', ``326111'', 
``326112'', ``326113'', ``326122'', ``326140'', ``326150'', ``326160'', 
``326191'', ``326211'', ``326220'', ``326291'', ``327110'', ``327212'', 
``327213'', ``327215'', ``327310'', ``327332'', ``327410'', ``327420'', 
``327910'', ``327993'', ``331110'', ``331315'', ``331511'', ``331512'', 
``332111'', ``332112'', ``332215'', ``332216'', ``332311'', ``332313'', 
``332321'', ``332410'', ``332420'', ``332431'', ``332510'', ``332911'', 
``332912'', ``332913'', ``332919'', ``332991'', ``332992'', ``333111'', 
``333112'', ``333120'', ``333132'', ``333242'', ``333244'', ``333415'', 
``333611'', ``333612'', ``333613'', ``333618'', ``333911'', ``333912'', 
``333913'', ``333921'', ``333923'', ``333992'', ``333995'', ``333996'', 
``334111'', ``334112'', ``334210'', ``334220'', ``334412'', ``334413'', 
``334417'', ``334418'', ``334510'', ``334511'', ``334513'', ``334514'', 
``334515'', ``334516'', ``334517'', ``334614'', ``335110'', ``335121'', 
``335210'', ``335221'', ``335222'', ``335224'', ``335228'', ``335312'', 
``335313'', ``335911'', ``335932'', ``336111'', ``336112'', ``336120'', 
``336212'', ``336213'', ``336214'', ``336310'', ``336320'', ``336330'', 
``336340'', ``336350'', ``336360'', ``336370'', ``336390'', ``336412'', 
``336413'', ``336414'', ``336415'', ``336510'', ``336611'', ``336612'', 
``336991'', ``336992'', ``336999'', ``337110'', ``337121'', ``337122'', 
``337124'', ``337125'', ``337211'', ``337214'', ``337910'', ``337920'', 
``339112'', ``339113'', ``339114'', ``339115'', ``339920'', ``339940'', 
“339992'', ``339993'', and ``339995''; and

0
b. Revise footnotes 3, 4, 5, and 7.
    The revisions read as follows:


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

* * * * *

             Small Business Size Standards by NAICS Industry
------------------------------------------------------------------------
                                          Size standards  Size standards
   NAICS codes      NAICS U.S. industry   in millions of   in number of
                           title              dollars        employees
------------------------------------------------------------------------
 
                              * * * * * * *
311111...........  Dog and Cat Food       ..............           1,000
                    Manufacturing.
 
                              * * * * * * *
311211...........  Flour Milling........  ..............           1,000
 
                              * * * * * * *
311221...........  Wet Corn Milling.....  ..............           1,250
 
                              * * * * * * *
311314...........  Cane Sugar             ..............           1,000
                    Manufacturing.
311340...........  Nonchocolate           ..............           1,000
                    Confectionery
                    Manufacturing.
311351...........  Chocolate and          ..............           1,250
                    Confectionery
                    Manufacturing from
                    Cacao Beans.
311352...........  Confectionery          ..............           1,000
                    Manufacturing from
                    Purchased Chocolate.
311411...........  Frozen Fruit, Juice,   ..............           1,000
                    and Vegetable
                    Manufacturing.
311412...........  Frozen Specialty Food  ..............           1,250
                    Manufacturing.
311421...........  Fruit and Vegetable    ..............       \3\ 1,000
                    Canning \3\.
311422...........  Specialty Canning....  ..............           1,250
311423...........  Dried and Dehydrated   ..............             750
                    Food Manufacturing.
311511...........  Fluid Milk             ..............           1,000
                    Manufacturing.
311512...........  Creamery Butter        ..............             750
                    Manufacturing.
311513...........  Cheese Manufacturing.  ..............           1,250
311514...........  Dry, Condensed, and    ..............             750
                    Evaporated Dairy
                    Product
                    Manufacturing.
311520...........  Ice Cream and Frozen   ..............           1,000
                    Dessert
                    Manufacturing.
311611...........  Animal (except         ..............           1,000
                    Poultry)
                    Slaughtering.
311612...........  Meat Processed from    ..............           1,000
                    Carcasses.

[[Page 4487]]

 
311613...........  Rendering and Meat     ..............             750
                    Byproduct Processing.
311615...........  Poultry Processing...  ..............           1,250
311710...........  Seafood Product        ..............             750
                    Preparation and
                    Packaging.
 
                              * * * * * * *
311812...........  Commercial Bakeries..  ..............           1,000
311813...........  Frozen Cakes, Pies,    ..............             750
                    and Other Pastries
                    Manufacturing.
311821...........  Cookie and Cracker     ..............           1,250
                    Manufacturing.
311824...........  Dry Pasta, Dough, and  ..............             750
                    Flour Mixes
                    Manufacturing from
                    Purchased Flour.
311830...........  Tortilla               ..............           1,250
                    Manufacturing.
311911...........  Roasted Nuts and       ..............             750
                    Peanut Butter
                    Manufacturing.
311919...........  Other Snack Food       ..............           1,250
                    Manufacturing.
311920...........  Coffee and Tea         ..............             750
                    Manufacturing.
311930...........  Flavoring Syrup and    ..............           1,000
                    Concentrate
                    Manufacturing.
311941...........  Mayonnaise, Dressing,  ..............             750
                    and Other Prepared
                    Sauce Manufacturing.
 
                              * * * * * * *
312111...........  Soft Drink             ..............           1,250
                    Manufacturing.
312112...........  Bottled Water          ..............           1,000
                    Manufacturing.
312113...........  Ice Manufacturing....  ..............             750
312120...........  Breweries............  ..............           1,250
312130...........  Wineries.............  ..............           1,000
312140...........  Distilleries.........  ..............           1,000
312230...........  Tobacco Manufacturing  ..............           1,500
313110...........  Fiber, Yarn, and       ..............           1,250
                    Thread Mills.
 
                              * * * * * * *
313230...........  Nonwoven Fabric Mills  ..............             750
 
                              * * * * * * *
314110...........  Carpet and Rug Mills.  ..............           1,500
314120...........  Curtain and Linen      ..............             750
                    Mills.
 
                              * * * * * * *
315110...........  Hosiery and Sock       ..............             750
                    Mills.
315190...........  Other Apparel          ..............             750
                    Knitting Mills.
315210...........  Cut and Sew Apparel    ..............             750
                    Contractors.
315220...........  Men's and Boys' Cut    ..............             750
                    and Sew Apparel
                    Manufacturing.
315240...........  Women's, Girls', and   ..............             750
                    Infants' Cut and Sew
                    Apparel
                    Manufacturing.
315280...........  Other Cut and Sew      ..............             750
                    Apparel
                    Manufacturing.
 
                              * * * * * * *
316992...........  Women's Handbag and    ..............             750
                    Purse Manufacturing.
 
                              * * * * * * *
321212...........  Softwood Veneer and    ..............           1,250
                    Plywood
                    Manufacturing.
321213...........  Engineered Wood        ..............             750
                    Member (except
                    Truss) Manufacturing.
 
                              * * * * * * *
321219...........  Reconstituted Wood     ..............             750
                    Product
                    Manufacturing.
321911...........  Wood Window and Door   ..............           1,000
                    Manufacturing.
 
                              * * * * * * *
321991...........  Manufactured Home      ..............           1,250
                    (Mobile Home)
                    Manufacturing.
 
                              * * * * * * *
322121...........  Paper (except          ..............           1,250
                    Newsprint) Mills.
 
                              * * * * * * *
322130...........  Paperboard Mills.....  ..............           1,250
322211...........  Corrugated and Solid   ..............           1,250
                    Fiber Box
                    Manufacturing.
 
                              * * * * * * *
322219...........  Other Paperboard       ..............           1,000
                    Container
                    Manufacturing.
322220...........  Paper Bag and Coated   ..............             750
                    and Treated Paper
                    Manufacturing.
322230...........  Stationery Product     ..............             750
                    Manufacturing.
322291...........  Sanitary Paper         ..............           1,500
                    Product
                    Manufacturing.
 
                              * * * * * * *
323117...........  Books Printing.......  ..............           1,250

[[Page 4488]]

 
 
                              * * * * * * *
324110...........  Petroleum Refineries   ..............       \4\ 1,500
                    \4\.
 
                              * * * * * * *
324191...........  Petroleum Lubricating  ..............             750
                    Oil and Grease
                    Manufacturing.
 
                              * * * * * * *
325194...........  Cyclic Crude,          ..............           1,250
                    Intermediate, and
                    Gum and Wood
                    Chemical
                    Manufacturing.
325199...........  All Other Basic        ..............           1,250
                    Organic Chemical
                    Manufacturing.
325211...........  Plastics Material and  ..............           1,250
                    Resin Manufacturing.
 
                              * * * * * * *
325312...........  Phosphatic Fertilizer  ..............             750
                    Manufacturing.
 
                              * * * * * * *
325320...........  Pesticide and Other    ..............           1,000
                    Agricultural
                    Chemical
                    Manufacturing.
325411...........  Medicinal and          ..............           1,000
                    Botanical
                    Manufacturing.
325412...........  Pharmaceutical         ..............           1,250
                    Preparation
                    Manufacturing.
325413...........  In[dash]Vitro          ..............           1,250
                    Diagnostic Substance
                    Manufacturing.
325414...........  Biological Product     ..............           1,250
                    (except Diagnostic)
                    Manufacturing.
325510...........  Paint and Coating      ..............           1,000
                    Manufacturing.
 
                              * * * * * * *
325611...........  Soap and Other         ..............           1,000
                    Detergent
                    Manufacturing.
325612...........  Polish and Other       ..............             750
                    Sanitation Good
                    Manufacturing.
325613...........  Surface Active Agent   ..............             750
                    Manufacturing.
325620...........  Toilet Preparation     ..............           1,250
                    Manufacturing.
 
                              * * * * * * *
325992...........  Photographic Film,     ..............           1,500
                    Paper, Plate, and
                    Chemical
                    Manufacturing.
 
                              * * * * * * *
326111...........  Plastics Bag and       ..............             750
                    Pouch Manufacturing.
326112...........  Plastics Packaging     ..............           1,000
                    Film and Sheet
                    (including
                    Laminated)
                    Manufacturing.
326113...........  Unlaminated Plastics   ..............             750
                    Film and Sheet
                    (except Packaging)
                    Manufacturing.
 
                              * * * * * * *
326122...........  Plastics Pipe and      ..............             750
                    Pipe Fitting
                    Manufacturing.
 
                              * * * * * * *
326140...........  Polystyrene Foam       ..............           1,000
                    Product
                    Manufacturing.
326150...........  Urethane and Other     ..............             750
                    Foam Product (except
                    Polystyrene)
                    Manufacturing.
326160...........  Plastics Bottle        ..............           1,250
                    Manufacturing.
326191...........  Plastics Plumbing      ..............             750
                    Fixture
                    Manufacturing.
 
                              * * * * * * *
326211...........  Tire Manufacturing     ..............       \5\ 1,500
                    (except Retreading)
                    \5\.
 
                              * * * * * * *
326220...........  Rubber and Plastics    ..............             750
                    Hoses and Belting
                    Manufacturing.
326291...........  Rubber Product         ..............             750
                    Manufacturing for
                    Mechanical Use.
 
                              * * * * * * *
327110...........  Pottery, Ceramics,     ..............           1,000
                    and Plumbing Fixture
                    Manufacturing.
 
                              * * * * * * *
327212...........  Other Pressed and      ..............           1,250
                    Blown Glass and
                    Glassware
                    Manufacturing.
327213...........  Glass Container        ..............           1,250
                    Manufacturing.
327215...........  Glass Product          ..............           1,000
                    Manufacturing Made
                    of Purchased Glass.
327310...........  Cement Manufacturing.  ..............           1,000
 
                              * * * * * * *
327332...........  Concrete Pipe          ..............             750
                    Manufacturing.
 
                              * * * * * * *
327410...........  Lime Manufacturing...  ..............             750
327420...........  Gypsum Product         ..............           1,500
                    Manufacturing.
327910...........  Abrasive Product       ..............             750
                    Manufacturing.
 

[[Page 4489]]

 
                              * * * * * * *
327993...........  Mineral Wool           ..............           1,500
                    Manufacturing.
 
                              * * * * * * *
331110...........  Iron and Steel Mills   ..............           1,500
                    and Ferroalloy
                    Manufacturing.
 
                              * * * * * * *
331315...........  Aluminum Sheet,        ..............           1,250
                    Plate, and Foil
                    Manufacturing.
 
                              * * * * * * *
331511...........  Iron Foundries.......  ..............           1,000
331512...........  Steel Investment       ..............           1,000
                    Foundries.
 
                              * * * * * * *
332111...........  Iron and Steel         ..............             750
                    Forging.
332112...........  Nonferrous Forging...  ..............             750
 
                              * * * * * * *
332215...........  Metal Kitchen          ..............             750
                    Cookware, Utensil,
                    Cutlery, and
                    Flatware (except
                    Precious)
                    Manufacturing.
332216...........  Saw Blade and          ..............             750
                    Handtool
                    Manufacturing.
332311...........  Prefabricated Metal    ..............             750
                    Building and
                    Component
                    Manufacturing.
 
                              * * * * * * *
332313...........  Plate Work             ..............             750
                    Manufacturing.
332321...........  Metal Window and Door  ..............             750
                    Manufacturing.
 
                              * * * * * * *
332410...........  Power Boiler and Heat  ..............             750
                    Exchanger
                    Manufacturing.
332420...........  Metal Tank (Heavy      ..............             750
                    Gauge) Manufacturing.
332431...........  Metal Can              ..............           1,500
                    Manufacturing.
 
                              * * * * * * *
332510...........  Hardware               ..............             750
                    Manufacturing.
 
                              * * * * * * *
332911...........  Industrial Valve       ..............             750
                    Manufacturing.
332912...........  Fluid Power Valve and  ..............           1,000
                    Hose Fitting
                    Manufacturing.
332913...........  Plumbing Fixture       ..............           1,000
                    Fitting and Trim
                    Manufacturing.
332919...........  Other Metal Valve and  ..............             750
                    Pipe Fitting
                    Manufacturing.
332991...........  Ball and Roller        ..............           1,250
                    Bearing
                    Manufacturing.
332992...........  Small Arms Ammunition  ..............           1,250
                    Manufacturing.
 
                              * * * * * * *
333111...........  Farm Machinery and     ..............           1,250
                    Equipment
                    Manufacturing.
333112...........  Lawn and Garden        ..............           1,500
                    Tractor and Home
                    Lawn and Garden
                    Equipment
                    Manufacturing.
333120...........  Construction           ..............           1,250
                    Machinery
                    Manufacturing.
 
                              * * * * * * *
333132...........  Oil and Gas Field      ..............           1,250
                    Machinery and
                    Equipment
                    Manufacturing.
 
                              * * * * * * *
333242...........  Semiconductor          ..............           1,500
                    Machinery
                    Manufacturing.
 
                              * * * * * * *
333244...........  Printing Machinery     ..............             750
                    and Equipment
                    Manufacturing.
 
                              * * * * * * *
333415...........  Air-Conditioning and   ..............           1,250
                    Warm Air Heating
                    Equipment and
                    Commercial and
                    Industrial
                    Refrigeration
                    Equipment
                    Manufacturing.
 
                              * * * * * * *
333611...........  Turbine and Turbine    ..............           1,500
                    Generator Set Units
                    Manufacturing.
333612...........  Speed Changer,         ..............             750
                    Industrial High-
                    Speed Drive, and
                    Gear Manufacturing.
333613...........  Mechanical Power       ..............             750
                    Transmission
                    Equipment
                    Manufacturing.
333618...........  Other Engine           ..............           1,500
                    Equipment
                    Manufacturing.
333911...........  Pump and Pumping       ..............             750
                    Equipment
                    Manufacturing.
333912...........  Air and Gas            ..............           1,000
                    Compressor
                    Manufacturing.
333913...........  Measuring and          ..............             750
                    Dispensing Pump
                    Manufacturing.
333921...........  Elevator and Moving    ..............           1,000
                    Stairway
                    Manufacturing.
 

[[Page 4490]]

 
                              * * * * * * *
333923...........  Overhead Traveling     ..............           1,250
                    Crane, Hoist, and
                    Monorail System
                    Manufacturing.
 
                              * * * * * * *
333992...........  Welding and Soldering  ..............           1,250
                    Equipment
                    Manufacturing.
 
                              * * * * * * *
333995...........  Fluid Power Cylinder   ..............             750
                    and Actuator
                    Manufacturing.
333996...........  Fluid Power Pump and   ..............           1,250
                    Motor Manufacturing.
 
                              * * * * * * *
334111...........  Electronic Computer    ..............           1,250
                    Manufacturing.
334112...........  Computer Storage       ..............           1,250
                    Device Manufacturing.
 
                              * * * * * * *
334210...........  Telephone Apparatus    ..............           1,250
                    Manufacturing.
334220...........  Radio and Television   ..............           1,250
                    Broadcasting and
                    Wireless
                    Communications
                    Equipment
                    Manufacturing.
 
                              * * * * * * *
334412...........  Bare Printed Circuit   ..............             750
                    Board Manufacturing.
334413...........  Semiconductor and      ..............           1,250
                    Related Device
                    Manufacturing.
 
                              * * * * * * *
334417...........  Electronic Connector   ..............           1,000
                    Manufacturing.
334418...........  Printed Circuit        ..............             750
                    Assembly (Electronic
                    Assembly)
                    Manufacturing.
 
                              * * * * * * *
334510...........  Electromedical and     ..............           1,250
                    Electrotherapeutic
                    Apparatus
                    Manufacturing.
334511...........  Search, Detection,     ..............           1,250
                    Navigation,
                    Guidance,
                    Aeronautical, and
                    Nautical System and
                    Instrument
                    Manufacturing.
 
                              * * * * * * *
334513...........  Instruments and        ..............             750
                    Related Products
                    Manufacturing for
                    Measuring,
                    Displaying, and
                    Controlling
                    Industrial Process
                    Variables.
334514...........  Totalizing Fluid       ..............             750
                    Meter and Counting
                    Device Manufacturing.
334515...........  Instrument             ..............             750
                    Manufacturing for
                    Measuring and
                    Testing Electricity
                    and Electrical
                    Signals.
334516...........  Analytical Laboratory  ..............           1,000
                    Instrument
                    Manufacturing.
334517...........  Irradiation Apparatus  ..............           1,000
                    Manufacturing.
 
                              * * * * * * *
334614...........  Software and Other     ..............           1,250
                    Prerecorded Compact
                    Disc, Tape, and
                    Record Reproducing.
335110...........  Electric Lamp Bulb     ..............           1,250
                    and Part
                    Manufacturing.
335121...........  Residential Electric   ..............             750
                    Lighting Fixture
                    Manufacturing.
 
                              * * * * * * *
335210...........  Small Electrical       ..............           1,500
                    Appliance
                    Manufacturing.
335221...........  Household Cooking      ..............           1,500
                    Appliance
                    Manufacturing.
335222...........  Household              ..............           1,250
                    Refrigerator and
                    Home Freezer
                    Manufacturing.
335224...........  Household Laundry      ..............           1,250
                    Equipment
                    Manufacturing.
335228...........  Other Major Household  ..............           1,000
                    Appliance
                    Manufacturing.
 
                              * * * * * * *
335312...........  Motor and Generator    ..............           1,250
                    Manufacturing.
335313...........  Switchgear and         ..............           1,250
                    Switchboard
                    Apparatus
                    Manufacturing.
 
                              * * * * * * *
335911...........  Storage Battery        ..............           1,250
                    Manufacturing.
 
                              * * * * * * *
335932...........  Noncurrent-Carrying    ..............           1,000
                    Wiring Device
                    Manufacturing.
 
                              * * * * * * *
336111...........  Automobile             ..............           1,500
                    Manufacturing.
336112...........  Light Truck and        ..............           1,500
                    Utility Vehicle
                    Manufacturing.
336120...........  Heavy Duty Truck       ..............           1,500
                    Manufacturing.
 
                              * * * * * * *
336212...........  Truck Trailer          ..............           1,000
                    Manufacturing.
336213...........  Motor Home             ..............           1,250
                    Manufacturing.
336214...........  Travel Trailer and     ..............           1,000
                    Camper Manufacturing.

[[Page 4491]]

 
336310...........  Motor Vehicle          ..............           1,000
                    Gasoline Engine and
                    Engine Parts
                    Manufacturing.
336320...........  Motor Vehicle          ..............           1,000
                    Electrical and
                    Electronic Equipment
                    Manufacturing.
336330...........  Motor Vehicle          ..............           1,000
                    Steering and
                    Suspension
                    Components (except
                    Spring)
                    Manufacturing.
336340...........  Motor Vehicle Brake    ..............           1,250
                    System Manufacturing.
336350...........  Motor Vehicle          ..............           1,500
                    Transmission and
                    Power Train Parts
                    Manufacturing.
336360...........  Motor Vehicle Seating  ..............           1,500
                    and Interior Trim
                    Manufacturing.
336370...........  Motor Vehicle Metal    ..............           1,000
                    Stamping.
336390...........  Other Motor Vehicle    ..............           1,000
                    Parts Manufacturing.
 
                              * * * * * * *
336412...........  Aircraft Engine and    ..............           1,500
                    Engine Parts
                    Manufacturing.
336413...........  Other Aircraft Parts   ..............       \7\ 1,250
                    and Auxiliary
                    Equipment
                    Manufacturing \7\.
336414...........  Guided Missile and     ..............           1,250
                    Space Vehicle
                    Manufacturing.
336415...........  Guided Missile and     ..............           1,250
                    Space Vehicle
                    Propulsion Unit and
                    Propulsion Unit
                    Parts Manufacturing.
 
                              * * * * * * *
336510...........  Railroad Rolling       ..............           1,500
                    Stock Manufacturing.
336611...........  Ship Building and      ..............           1,250
                    Repairing.
336612...........  Boat Building........  ..............           1,000
336991...........  Motorcycle, Bicycle,   ..............           1,000
                    and Parts
                    Manufacturing.
336992...........  Military Armored       ..............           1,500
                    Vehicle, Tank, and
                    Tank Component
                    Manufacturing.
336999...........  All Other              ..............           1,000
                    Transportation
                    Equipment
                    Manufacturing.
337110...........  Wood Kitchen Cabinet   ..............             750
                    and Countertop
                    Manufacturing.
337121...........  Upholstered Household  ..............           1,000
                    Furniture
                    Manufacturing.
337122...........  Nonupholstered Wood    ..............             750
                    Household Furniture
                    Manufacturing.
337124...........  Metal Household        ..............             750
                    Furniture
                    Manufacturing.
337125...........  Household Furniture    ..............             750
                    (except Wood and
                    Metal) Manufacturing.
 
                              * * * * * * *
337211...........  Wood Office Furniture  ..............           1,000
                    Manufacturing.
 
                              * * * * * * *
337214...........  Office Furniture       ..............           1,000
                    (except Wood)
                    Manufacturing.
 
                              * * * * * * *
337910...........  Mattress               ..............           1,000
                    Manufacturing.
337920...........  Blind and Shade        ..............           1,000
                    Manufacturing.
 
                              * * * * * * *
339112...........  Surgical and Medical   ..............           1,000
                    Instrument
                    Manufacturing.
339113...........  Surgical Appliance     ..............             750
                    and Supplies
                    Manufacturing.
339114...........  Dental Equipment and   ..............             750
                    Supplies
                    Manufacturing.
339115...........  Ophthalmic Goods       ..............           1,000
                    Manufacturing.
 
                              * * * * * * *
339920...........  Sporting and Athletic  ..............             750
                    Goods Manufacturing.
 
                              * * * * * * *
339940...........  Office Supplies        ..............             750
                    (except Paper)
                    Manufacturing.
 
                              * * * * * * *
339992...........  Musical Instrument     ..............           1,000
                    Manufacturing.
339993...........  Fastener, Button,      ..............             750
                    Needle, and Pin
                    Manufacturing.
 
                              * * * * * * *
339995...........  Burial Casket          ..............           1,000
                    Manufacturing.
 
                              * * * * * * *
------------------------------------------------------------------------

* * * * *
    Footnotes
* * * * *
    3. NAICS code 311421--For purposes of Government procurement for 
food canning and preserving, the standard of 1,000 employees excludes 
agricultural labor as defined in 3306(k) of the Internal Revenue Code, 
26 U.S.C. 3306(k).
    4. NAICS code 324110--To qualify as small for purposes of 
Government procurement, the petroleum refiner, including its 
affiliates, must be a concern that has either no more than 1,500 
employees or no more than 200,000 barrels per calendar day total 
Operable Atmospheric Crude Oil Distillation capacity. Capacity includes 
all domestic and foreign affiliates, all owned or leased facilities, 
and all facilities under a processing agreement or an arrangement such 
as an exchange agreement or a throughput. To qualify

[[Page 4492]]

under the capacity size standard, the firm, together with its 
affiliates, must be primarily engaged in refining crude petroleum into 
refined petroleum products. A firm's ``primary industry'' is determined 
in accordance with 13 CFR 121.107.
    5. NAICS code 326211--For Government procurement, a firm is small 
for bidding on a contract for pneumatic tires within Census NAICS 
Product Classification codes 3262111 and 3262113, provided that:
    (a) The value of tires within Census NAICS Product Classification 
codes 3262113 that it manufactured in the United States during the 
previous calendar year is more than 50 percent of the value of its 
total worldwide manufacture,
    (b) The value of pneumatic tires within Census NAICS Product 
Classification codes 3262113 comprising its total worldwide manufacture 
during the preceding calendar year was less than 5 percent of the value 
of all such tires manufactured in the United States during that period, 
and
    (c) The value of the principal product that it manufactured, 
produced, or sold worldwide during the preceding calendar year is less 
than 10 percent of the total value of such products manufactured or 
otherwise produced or sold in the United States during that period.
* * * * *
    7. NAICS code 336413--Contracts for the rebuilding or overhaul of 
aircraft ground support equipment on a contract basis are classified 
under NAICS code 336413.
* * * * *

Maria Contreras-Sweet,
Administrator.
[FR Doc. 2016-00924 Filed 1-25-16; 8:45 am]
BILLING CODE 8025-01-P