Small Business Size Standards: Professional, Scientific and Technical Services; Management of Companies and Enterprises; Administrative and Support and Waste Management and Remediation Services, 72584-72608 [2020-24903]
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72584
Proposed Rules
Federal Register
Vol. 85, No. 220
Friday, November 13, 2020
This section of the FEDERAL REGISTER
contains notices to the public of the proposed
issuance of rules and regulations. The
purpose of these notices is to give interested
persons an opportunity to participate in the
rule making prior to the adoption of the final
rules.
SMALL BUSINESS ADMINISTRATION
13 CFR Part 121
RIN 3245–AG91
Small Business Size Standards:
Professional, Scientific and Technical
Services; Management of Companies
and Enterprises; Administrative and
Support and Waste Management and
Remediation Services
U.S. Small Business
Administration.
AGENCY:
ACTION:
Proposed rule.
The U.S. Small Business
Administration (SBA) proposes to
increase its receipts-based small
business size definitions (commonly
referred to as ‘‘size standards’’) for
North American Industry Classification
System (NAICS) sectors related to
Professional, Scientific and Technical
Services; Management of Companies
and Enterprises; Administrative and
Support and Waste Management and
Remediation Services. SBA proposes to
increase size standards for 46 industries
in those sectors, including 27 industries
in NAICS Sector 54 (Professional,
Scientific and Technical Services), 2
industries in Sector 55 (Management of
Companies and Enterprises), and 17
industries in Sector 56 (Administrative
and Support and Waste Management
and Remediation Services). SBA’s
proposed revisions relied on its recently
revised ‘‘Size Standards Methodology’’
(Methodology). SBA seeks comments on
its proposed changes to size standards
in the above sectors, and the data
sources it evaluated to develop the
proposed size standards.
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SUMMARY:
SBA must receive comments to
this proposed rule on or before January
12, 2021.
ADDRESSES: Identify your comments by
RIN 3245–AG91 and submit them by
one of the following methods: (1)
Federal eRulemaking Portal:
www.regulations.gov. Follow the
instructions for submitting comments;
or (2) Mail/Hand Delivery/Courier:
Khem R. Sharma, Ph.D., Chief, Office of
Size Standards, 409 Third Street SW,
Mail Code 6530, Washington, DC 20416.
SBA will post all comments to this
proposed rule on www.regulations.gov.
If you wish to submit confidential
business information (CBI) as defined in
the User Notice at www.regulations.gov,
you must submit such information to
U.S. Small Business Administration,
Khem R. Sharma, Ph.D., Chief, Office of
Size Standards, 409 Third Street SW,
Mail Code 6530, Washington, DC 20416,
or send an email to sizestandards@
sba.gov. Highlight the information that
you consider to be CBI and explain why
you believe SBA should hold this
information as confidential. SBA will
review your information and determine
whether it will make the information
public.
FOR FURTHER INFORMATION CONTACT:
Jorge Laboy-Bruno, Ph.D., Economist,
Office of Size Standards, (202) 205–6618
or sizestandards@sba.gov.
SUPPLEMENTARY INFORMATION:
DATES:
Discussion of Size Standards
To determine eligibility for Federal
small business assistance, SBA
establishes small business size
definitions (usually referred to as ‘‘size
standards’’) for private sector industries
in the United States. SBA uses two
primary measures of business size for
size standards purposes: Average annual
receipts and average number of
employees. SBA uses financial assets for
certain financial industries and refining
capacity, in addition to employees, for
the petroleum refining industry to
measure business size. In addition,
SBA’s Small Business Investment
Company (SBIC), Certified Development
Company (504), and 7(a) Loan Programs
use either the industry-based size
standards or tangible net worth and net
income-based alternative size standards
to determine eligibility for those
programs.
In September 2010, Congress passed
the Small Business Jobs Act of 2010
(Pub. L. 111–240, 124 Stat. 2504,
September 27, 2010) (‘‘Jobs Act’’),
requiring SBA to review all size
standards every 5 years and make
necessary adjustments to reflect current
industry and market conditions. In
accordance with the Jobs Act, in early
2016, SBA completed the first 5-year
review of all size standards—except
those for agricultural enterprises for
which size standards were previously
set by Congress—and made appropriate
adjustments to size standards for a
number of industries to reflect current
industry and Federal market conditions.
During the previous 5-year
comprehensive review, SBA reviewed
the receipts-based size standards for 45
industries and 3 exceptions within
NAICS Sector 54 (Professional,
Scientific and Technical Services), 2
industries within Sector 55
(Management of Companies and
Enterprises), and 44 industries in Sector
56 (Administrative and Support and
Waste Management and Remediation
Services). These reviews of receiptsbased size standards occurred during
October 2010 to December 2013. SBA’s
analyses of the relevant industry and
Federal contracting data available at that
time supported increasing size
standards for 37 industries and
maintaining current size standards for
11 industries in Sector 54 (77 FR 10943,
February 10, 2012), increasing size
standards for 2 industries in Sector 55
(78 FR 37409, June 20, 2013), and
increasing size standards in 37
industries and retaining existing size
standards in 7 industries in Sector 56
(77 FR 72291, December 6, 2012). Table
1, Size Standards Revisions During the
First 5-Year Review, provides a
summary of these revisions by NAICS
sector.
TABLE 1—SIZE STANDARDS REVISIONS DURING THE FIRST 5-YEAR REVIEW
Sector
Sector name
54 ......................
55 ......................
Professional, Scientific and Technical Services ...............
Management of Companies and Enterprises ...................
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Number of
size standards
reviewed
Number of
size standards
increased
Number of
size standards
decreased
Number of
size standards
maintained
48
2
37
2
0
0
11
0
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TABLE 1—SIZE STANDARDS REVISIONS DURING THE FIRST 5-YEAR REVIEW—Continued
Number of
size standards
reviewed
Number of
size standards
increased
Number of
size standards
decreased
Number of
size standards
maintained
Administrative and Support and Waste Management
and Remediation Services.
44
37
0
7
...........................................................................................
94
76
0
18
Sector
Sector name
56 ......................
Total ...........
Currently, there are 27 different size
standards levels covering 1,023 NAICS
industries and 14 subindustry activities
(commonly known as ‘‘exceptions’’ in
SBA’s table of size standards). 16 of
these size levels are based on average
annual receipts, 9 are based on average
number of employees, and 2 are based
on other measures.
SBA also adjusts its monetary-based
size standards for inflation at least once
every 5 years. An interim final rule on
SBA’s latest inflation adjustment to size
standards, effective August 19, 2019,
was published in the Federal Register
on July 18, 2019 (84 FR 34261). SBA
also updates its size standards every 5
years to adopt the Office of Management
and Budget’s (OMB) quinquennial
NAICS revisions to its table of small
business size standards. Effective
October 1, 2017, SBA adopted the
OMB’s 2017 NAICS revisions to its size
standards (82 FR 44886, September 27,
2017).
This proposed rule is one of a series
of proposed rules that will review size
standards of industries grouped by
various NAICS sectors. Rather than
review all size standards at one time,
SBA is reviewing size standards by
grouping industries within various
NAICS sectors that use the same size
measure (i.e., employees or receipts). In
the current review, SBA will review size
standards in six (6) groups of NAICS
sectors. (In the prior review, SBA
reviewed size standards mostly on a
sector-by-sector basis.) Once SBA
completes its review of size standards
for a group of sectors, it issues for public
comments a proposed rule to revise size
standards for those industries based on
the latest available data and other
factors deemed relevant by the SBA’s
Administrator.
Below is a discussion of SBA’s
revised ‘‘Size Standards Methodology’’
(Methodology), available at
www.sba.gov/size, for establishing,
reviewing, or modifying receipts-based
size standards that SBA has applied to
this proposed rule. SBA examines the
structural characteristics of an industry
as a basis to assess industry differences
and the overall degree of
competitiveness of an industry and of
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firms within the industry. Industry
structure is typically examined by
analyzing four primary factors: Average
firm size, degree of competition within
an industry, start-up costs and entry
barriers, and distribution of firms by
size. To assess the ability of small
businesses to compete for Federal
contracting opportunities under the
current size standards, as the fifth
primary factor, SBA also examines, for
each industry averaging $20 million or
more in average annual Federal contract
dollars, the small business share of
Federal contract dollars relative to the
small business share of total industry
receipts. When necessary, SBA also
considers other secondary factors that
are relevant to the industries and the
interests of small businesses, including
impacts of size standards changes on
small businesses.
Size Standards Methodology
SBA has recently revised its
Methodology for establishing,
reviewing, or modifying size standards
when necessary. See the notification in
the April 11, 2019, edition of the
Federal Register (84 FR 14587). The
revised Methodology is available on
SBA’s size standards web page at
www.sba.gov/size. Prior to finalizing the
revised Methodology, SBA issued a
notification in the April 27, 2018,
edition of the Federal Register (83 FR
18468) to solicit comments from the
public and notify stakeholders of the
proposed changes to the Methodology.
SBA considered all public comments in
finalizing the revised Methodology. For
a summary of comments and SBA’s
responses, refer to the SBA’s April 11,
2019, Federal Register notification cited
above.
The revised Methodology represents a
major change from the previous
methodology, which was issued on
October 21, 2009 (74 FR 53940).
Specifically, in its revised Methodology,
SBA is replacing the ‘‘anchor’’ approach
applied in the previous methodology
with a ‘‘percentile’’ approach for
evaluating differences in characteristics
among various industries. Under the
‘‘anchor’’ approach, SBA generally
evaluated the characteristics of
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individual industries relative to the
average characteristics of industries
with the anchor size standard to
determine whether they should have a
higher or a lower size standard than the
anchor. In the ‘‘percentile’’ approach,
SBA ranks each industry among all
industries with the same measure of size
standards (such as receipts or
employees) in terms of four primary
industry factors, discussed in the
Industry Analysis subsection below.
The ‘‘percentile’’ approach is explained
more fully in the Industry Analysis
section below. For a more detailed
explanation, please see the revised
Methodology at www.sba.gov/size.
Additionally, as the fifth factor, SBA
evaluates the difference between the
small business share of Federal contract
dollars and the small business share of
total industry receipts to compute the
size standard for the Federal contracting
factor. The overall size standard for an
industry is then obtained by averaging
all size standards supported by each
primary factor. The evaluation of the
Federal contracting factor is explained
more fully in the Industry Analysis
section below.
SBA does not apply all aspects of its
Methodology to all proposed rules
because not all features are relevant for
every industry covered by each
proposed rule. For example, since all
industries covered by this proposed rule
have receipts-based size standards, the
Methodology described in this proposed
rule applies only to establishing,
reviewing, or modifying receipts-based
size standards. SBA’s Methodology is
available on its website at www.sba.gov/
size.
Industry Analysis
Congress granted SBA’s Administrator
discretion to establish detailed small
business size standards. 15 U.S.C.
632(a)(2). Specifically, section 3(a)(3) of
the Small Business Act (15 U.S.C.
632(a)(3)) requires that ‘‘. . . the [SBA]
Administrator shall ensure that the size
standard varies from industry to
industry to the extent necessary to
reflect the differing characteristics of the
various industries and consider other
factors deemed to be relevant by the
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Administrator.’’ Accordingly, the
economic structure of an industry is the
basis for establishing, reviewing, or
modifying small business size
standards. In addition, SBA considers
current economic conditions, its
mission and program objectives, the
Administration’s current policies,
impacts on small businesses under
current size and proposed or revised
size standards, suggestions from
industry groups and Federal agencies,
and public comments on the proposed
rule. SBA also examines whether a size
standard based on industry and other
relevant data successfully excludes
businesses that are dominant in the
industry.
The goal of SBA’s size standards
review is to determine whether its
existing small business size standards
reflect the current industry structure
and Federal market conditions and
revise them when the latest available
data suggest that revisions are
warranted. In the past, SBA compared
the characteristics of each industry with
the average characteristics of a group of
industries associated with the ‘‘anchor’’
size standard. For example, in the first
5-year comprehensive review of size
standards under the Jobs Act, $7.0
million (now $8.0 million due to the
inflation adjustment in 2019; see 84 FR
34261, July 18, 2019) was considered
the ‘‘anchor’’ for receipts-based size
standards and 500 employees was the
‘‘anchor’’ for employee-based size
standards. If the characteristics of a
specific industry under review were
similar to the average characteristics of
industries in the anchor group, SBA
generally adopted the anchor size
standard for that industry. If the specific
industry’s characteristics were
significantly different from those in the
anchor group, SBA assigned a size
standard that was higher or lower than
the anchor. To determine a size
standard above or below the anchor size
standard, SBA evaluated the
characteristics of a second comparison
group of industries with higher size
standards. For industries with receiptsbased standards, the second comparison
group consisted of industries with size
standards between $23.0 million and
$35.5 million, with the weighted
average size standard for the group
equaling $29.0 million. For
manufacturing industries and other
industries with employee-based size
standards (except for Wholesale Trade
and Retail Trade), the second
comparison group included industries
with a size standard of 1,000 employees
or 1,500 employees, with the weighted
average size standard of 1,323
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employees. Using the anchor size
standard and average size standard for
the second comparison group, SBA
computed a size standard for an
industry’s characteristic (factor) based
on the industry’s position for that factor
relative to the average values of the
same factor for industries in the anchor
and second comparison groups.
Under the ‘‘percentile’’ approach, for
each industry factor, an industry is
ranked and compared with the 20th
percentile and 80th percentile values of
that factor among the industries sharing
the same measure of size standards (i.e.,
receipts or employees). Combining that
result with the 20th percentile and 80th
percentile values of size standards
among the industries with the same
measure of size standards, SBA
computes a size standard supported by
each industry factor for each industry.
In the previous Methodology,
comparison industry groups were
predetermined independent of the data,
while in the revised Methodology they
are established using the actual data. A
more detailed description of the
percentile method is provided in SBA’s
Methodology, available at www.sba.gov/
size.
The primary factors that SBA
evaluates to examine industry structure
include average firm size, startup costs
and entry barriers, industry
competition, and distribution of firms
by size. SBA also evaluates, as an
additional primary factor, small
business success in receiving Federal
contracting assistance under the current
size standards. Specifically, for the
Federal contracting factor, SBA
examines the small business share of
Federal contract dollars relative to small
business share of total receipts within
an industry. These are, generally, the
five most important factors SBA
examines when establishing, reviewing,
or revising a size standard for an
industry. However, SBA will also
consider and evaluate other secondary
factors that it believes are relevant to a
particular industry (such as
technological changes, growth trends,
SBA financial assistance, and other
program factors). SBA also considers
possible impacts of size standard
revisions on eligibility for Federal small
business assistance, current economic
conditions, the Administration’s
policies, and suggestions from industry
groups and Federal agencies. Public
comments on proposed rules also
provide important additional
information. SBA thoroughly reviews all
public comments before making a final
decision on its proposed revisions to
size standards. Below are brief
descriptions of each of the five primary
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factors that SBA has evaluated for each
industry being reviewed in this
proposed rule. A more detailed
description of this analysis is provided
in the SBA’s Methodology, available at
www.sba.gov/size.
1. Average Firm Size
SBA computes two measures of
average firm size: Simple average and
weighted average. For industries with
receipts-based size standards, the
simple average is the total receipts of
the industry divided by the total
number of firms in the industry. The
weighted average firm size is the
summation of all the receipts of the
firms in an industry multiplied by their
share of receipts in the industry. The
simple average weighs all firms within
an industry equally regardless of their
size. The weighted average overcomes
that limitation by giving more weight to
larger firms. The size standard
supported by average firm size is
obtained by averaging size standards
supported by simple average firm size
and weighted average firm size.
If the average firm size of an industry
is higher than the average firm size for
most other industries, this would
generally support a size standard higher
than the size standards for other
industries. Conversely, if the industry’s
average firm size is lower than that of
most other industries, it would provide
a basis to assign a lower size standard
as compared to size standards for most
other industries.
2. Startup Costs and Entry Barriers
Startup costs reflect a firm’s initial
size in an industry. New entrants to an
industry must have sufficient capital
and other assets to start and maintain a
viable business. If firms entering an
industry under review have greater
capital requirements than firms in most
other industries, all other factors
remaining the same, this would be a
basis for a higher size standard.
Conversely, if the industry has smaller
capital needs compared to most other
industries, a lower size standard would
be considered appropriate.
Given the lack of actual data on
startup costs and entry barriers by
industry, SBA uses average assets as a
proxy for startup costs and entry
barriers. To calculate average assets,
SBA begins with the sales to total assets
ratio for an industry from the Risk
Management Association’s Annual
Statement Studies, available at https://
rmau.org. SBA then applies these ratios
to the average receipts of firms in that
industry obtained from the Economic
Census tabulation. An industry with
average assets that are significantly
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higher than most other industries is
likely to have higher startup costs; this
in turn will support a higher size
standard. Conversely, an industry with
average assets that are similar to or
lower than most other industries is
likely to have lower startup costs; this
will support either lowering or
maintaining the size standard.
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3. Industry Competition
Industry competition is generally
measured by the share of total industry
receipts generated by the largest firms in
an industry. SBA generally evaluates the
share of industry receipts generated by
the four largest firms in each industry.
This is referred to as the ‘‘4-firm
concentration ratio,’’ a commonly used
economic measure of market
competition. Using the 4-firm
concentration ratio, SBA compares the
degree of concentration within an
industry to the degree of concentration
of the other industries with the same
measure of size standards. If a
significantly higher share of economic
activity within an industry is
concentrated among the four largest
firms compared to most other
industries, all else being equal, SBA
would set a size standard that is
relatively higher than for most other
industries. Conversely, if the market
share of the four largest firms in an
industry is appreciably lower than the
similar share for most other industries,
the industry will be assigned a size
standard that is lower than for most
other industries.
4. Distribution of Firms by Size
SBA examines the shares of industry
total receipts accounted for by firms of
different receipts and employment sizes
in an industry. This is an additional
factor SBA considers in assessing
competition within an industry besides
the 4-firm concentration ratio. If the
preponderance of an industry’s
economic activity is attributable to
smaller firms, this generally indicates
that small businesses are competitive in
that industry, which would support
adopting a smaller size standard. A
higher size standard would be
supported for an industry in which the
distribution of firms indicates that most
of the economic activity is concentrated
among the larger firms.
Concentration is a measure of
inequality of distribution. To determine
the degree of inequality of distribution
in an industry, SBA computes the Gini
coefficient, using the Lorenz curve. The
Lorenz curve presents the cumulative
percentages of units (firms) along the
horizontal axis and the cumulative
percentages of receipts (or other
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measures of size) along the vertical axis.
(For further detail, see SBA’s
Methodology on its website at
www.sba.gov/size.) Gini coefficient
values vary from zero to one. If receipts
are distributed equally among all the
firms in an industry, the value of the
Gini coefficient will equal zero. If an
industry’s total receipts are attributable
to a single firm, the Gini coefficient will
equal one.
SBA compares the degree of
inequality of distribution for an industry
under review with other industries with
the same type of size standards. If an
industry shows a higher degree of
inequality of distribution (hence a
higher Gini coefficient value) compared
to most other industries in the group,
this would, all else being equal, warrant
a size standard that is higher than the
size standards assigned to most other
industries. Conversely, an industry with
lower degree of inequality (i.e., a lower
Gini coefficient value) than most others
will be assigned a lower size standard
relative to others.
5. Federal Contracting
As the fifth factor, SBA examines the
success small businesses are having in
winning Federal contracts under the
current size standard as well as the
possible impact a size standard change
may have on Federal small business
contracting opportunities. The Small
Business Act requires the Federal
Government to ensure that small
businesses receive a ‘‘fair proportion’’ of
Federal contracts. The legislative history
also discusses the importance of size
standards in Federal contracting. To
incorporate the Federal contracting
factor in the size standards analysis,
SBA evaluates small business
participation in Federal contracting in
terms of the share of total Federal
contract dollars awarded to small
businesses relative to the small business
share of total receipts within an
industry. In general, if the share of
Federal contract dollars awarded to
small businesses in an industry is
significantly smaller than the small
business share of total industry receipts,
all else remaining the same, a
justification would exist for considering
a size standard higher than the current
size standard. In cases where small
business share of the Federal market is
already appreciably high relative to the
small business share of the overall
market, SBA generally assumes that the
existing size standard is adequate with
respect to the Federal contracting factor.
The disparity between the small
business Federal market share and
industry-wide small business share may
be due to various factors, such as
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extensive administrative and
compliance requirements associated
with Federal contracts, the different
skill set required to perform Federal
contracts as compared to typical
commercial contracting work, and the
size of Federal contracts. These, as well
as other factors, are likely to influence
the type of firms within an industry that
compete for Federal contracts. By
comparing the small business Federal
contracting share with the industrywide small business share, SBA
includes in its size standards analysis
the latest Federal market conditions.
Besides the impact on Federal
contracting, SBA also examines impacts
on SBA’s loan programs both under the
current and revised size standards.
Sources of Industry and Program Data
SBA’s primary source of industry data
used in this proposed rule for evaluating
industry characteristics and developing
size standards is a special tabulation of
the Economic Census from the U.S.
Census Bureau (www.census.gov/econ/
census). The tabulation based on the
2012 Economic Census is the latest
available. The special tabulation
provides industry data on the number of
firms, number of establishments,
number of employees, annual payroll,
and annual receipts of companies by
Industry (6-digit level), Industry Group
(4-digit level), Subsector (3-digit level),
and Sector (2-digit level). These data are
arrayed by various classes of firms’ size
based on the overall number of
employees and receipts of the entire
enterprise (all establishments and
affiliated firms) from all industries. The
special tabulation also contains
information for different levels of
NAICS categories on average and
median firm size in terms of both
receipts and employment, total receipts
generated by the four and eight largest
firms, the Herfindahl-Hirschman Index
(HHI), the Gini coefficient, and size
distributions of firms by various receipts
and employment size groupings.
In some cases where data were not
available due to disclosure prohibitions
in the Census Bureau’s tabulation, SBA
either estimated missing values using
available relevant data or examined data
at a higher level of industry aggregation,
such as at the NAICS Sector (2-digit),
Subsector (3-digit), or Industry Group
(4-digit) level. In some instances, SBA’s
analysis was based only on those factors
for which data were available or
estimates of missing values were
possible.
To evaluate some industries that are
not covered by the Economic Census,
SBA used a similar special tabulation of
the latest County Business Patterns
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(CBP) published by the U.S. Census
Bureau (www.census.gov/programssurveys/cbp.html). Similarly, to evaluate
industries in NAICS Sector 11 that are
also not covered by the Economic
Census and CBP, SBA evaluated a
similar special tabulation based on the
2012 Census of Agriculture
(www.nass.usda.gov) from the National
Agricultural Statistics Service (NASS).
Besides the Economic Census,
Agricultural Census and CBP
tabulations, SBA also evaluates relevant
industry data from other sources when
necessary, especially for industries that
are not covered by the Economic Census
or CBP. These include the Quarterly
Census of Employment and Wages
(QCEW, also known as ES–202 data)
(www.bls.gov/cew/) and Business
Employment Dynamics (BED) data
(www.bls.gov/bdm/) from the U.S.
Bureau of Labor Statistics. Similarly, to
evaluate certain financial industries that
have asset-based size standards, SBA
examines the data from the Statistics on
Depository Institutions (SDI) database
(www5.fdic.gov/sdi/main.asp) of the
Federal Depository Insurance
Corporation (FDIC) data. Finally, to
evaluate the capacity component of the
Petroleum Refiners (NAICS 324110) size
standard, SBA evaluates the petroleum
production data from the Energy
Information Administration
(www.eia.gov).
To calculate average assets, SBA used
sales to total assets ratios from the Risk
Management Association’s Annual
eStatement Studies, 2016–2018 (https://
rmau.org). To evaluate Federal
contracting trends and evaluate two
exceptions in Sector 11 and one
exception in Sector 23, SBA examined
the data on Federal prime contract
awards from the Federal Procurement
Data System—Next Generation (FPDS–
NG) (www.fpds.gov) for fiscal years
2016–2018. To assess the impact on
financial assistance to small businesses,
SBA examined its internal data on 7(a)
and 504 loan programs for fiscal years
2016–2018. For some portion of impact
analysis, SBA also evaluated the data
from the System of Award Management
(SAM) (www.sam.gov).
Data sources and estimation
procedures SBA uses in its size
standards analysis are documented in
detail in SBA’s Methodology, which is
available at www.sba.gov/size.
Dominance in Field of Operation
Section 3(a) of the Small Business Act
(15 U.S.C. 632(a)) defines a small
business concern as one that is: (1)
Independently owned and operated; (2)
not dominant in its field of operation;
and (3) within a specific small business
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definition or size standard established
by the SBA Administrator. SBA
considers as part of its evaluation
whether a business concern at a
proposed size standard would be
dominant in its field of operation. For
this, SBA generally examines the
industry’s market share of firms at the
proposed or revised size standard as
well as the distribution of firms by size.
Market share and size distribution may
indicate whether a firm can exercise a
major controlling influence on a
national basis in an industry where a
significant number of business concerns
are engaged. If a contemplated size
standard includes a dominant firm, SBA
will consider a lower size standard to
exclude the dominant firm from being
defined as small.
Selection of Size Standards
In the 2009 Methodology, which SBA
applied to the first 5-year
comprehensive review of size standards,
SBA adopted a fixed number of size
standards levels as part of its effort to
simplify size standards. In response to
public comments to the 2009
Methodology white paper, and the 2013
amendment to the Small Business Act
(section 3(a)(8)) under section 1661 of
the National Defense Authorization Act
for Fiscal Year 2013 (‘‘NDAA 2013’’)
(Pub. L. 112–239, January 2, 2013), in
the revised Methodology, SBA has
relaxed the limitation on the number of
small business size standards.
Specifically, section 1661 of NDAA
2013 states, ‘‘SBA cannot limit the
number of size standards, and shall
assign the appropriate size standard to
each industry identified by NAICS.’’
In the revised Methodology, SBA
calculates a separate size standard for
each NAICS industry. However, to
account for errors and limitations
associated with various data that SBA
evaluates in the size standards analysis,
SBA rounds the calculated size standard
value for a receipts-based size standard
to the nearest $500,000, except for
agricultural industries in Subsectors 111
and 112 for which the calculated size
standards will be rounded to the nearest
$250,000. This rounding procedure is
applied both in calculating a size
standard for each of the five primary
factors and in calculating the overall
size standard for the industry.
As a policy decision, SBA continues
to maintain the minimum and
maximum levels for both receipts and
employee-based size standards.
Accordingly, SBA will not generally
propose or adopt a size standard that is
either below the minimum level or
above the maximum, even though the
calculations yield values below the
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Frm 00005
Fmt 4702
Sfmt 4702
minimum or above the maximum. The
minimum size standard reflects the size
an established small business should be
to have adequate capabilities and
resources to be able to compete for and
perform Federal contracts (but does not
account for small businesses that are
newly formed or just starting
operations). On the other hand, the
maximum size standard represents the
level above which businesses, if
qualified as small, would outcompete
much smaller businesses when
accessing Federal assistance.
With respect to receipts-based size
standards, SBA has established $6.0
million and $41.5 million, respectively,
as the minimum and maximum size
standard levels (except for most
agricultural industries in NAICS
Subsectors 111 and 112). These levels
reflect the current minimum of $6.0
million and the current maximum of
$41.5 million in SBA’s existing size
standards. The industry data suggests
that $6.0 million minimum and $41.5
million maximum size standards would
be too high for agricultural industries.
Accordingly, SBA has established $1.0
million as the minimum size standard
and $5.0 million as the maximum size
standard for industries in Subsector 111
(Crop Production) and Subsector 112
(Animal Production and Aquaculture).
Evaluation of Industry Factors
As mentioned earlier, to assess the
appropriateness of the current size
standards, SBA evaluates the structure
of each industry in terms of four
economic characteristics or factors:
Average firm size, average assets size as
a proxy for startup costs and entry
barriers, the 4-firm concentration ratio
as a measure of industry competition,
and size distribution of firms using the
Gini coefficient. For each size standard
type (i.e., receipts-based or employeebased), SBA ranks industries both in
terms of each of the four industry factors
and in terms of the existing size
standard and computes the 20th
percentile and 80th percentile values for
both. SBA then evaluates each industry
by comparing its value for each industry
factor to the 20th percentile and 80th
percentile values for the corresponding
factor for industries under a particular
type of size standard.
If the characteristics of an industry
under review within a particular size
standard type are similar to the average
characteristics of industries within the
same size standard type in the 20th
percentile, SBA will consider adopting
as an appropriate size standard for that
industry the 20th percentile value of
size standards for those industries. For
each size standard type, if the industry’s
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72589
Federal Register / Vol. 85, No. 220 / Friday, November 13, 2020 / Proposed Rules
characteristics are similar to the average
characteristics of industries in the 80th
percentile, SBA will assign a size
standard that corresponds to the 80th
percentile in the size standard rankings
of industries. A separate size standard is
established for each factor based on the
amount of differences between the
factor value for an industry under a
particular size standard type and 20th
percentile and 80th percentile values for
the corresponding factor for all
industries in the same type.
Specifically, the actual level of the new
size standard for each industry factor is
derived by a linear interpolation using
the 20th percentile and 80th percentile
values of that factor and corresponding
percentiles of size standards. Each
calculated size standard is bounded
between the minimum and maximum
size standards levels, as discussed
before. As noted earlier, the calculated
value for a receipts-based size standard
for each industry factor is rounded to
the nearest $500,000, except for
industries in Subsectors 111 and 112 for
which a calculated size standard is
rounded to the nearest $250,000.
Table 2, 20th and 80th Percentiles of
Industry Factors for Receipts-Based Size
Standards, shows the 20th percentile
and 80th percentile values for average
firm size (simple and weighted), average
assets size, 4-firm concentration ratio,
and Gini coefficient for industries with
receipts-based size standards.
TABLE 2—20TH AND 80TH PERCENTILES OF INDUSTRY FACTORS FOR RECEIPTS-BASED SIZE STANDARDS
Industries/percentiles
Weighted average
receipts size
($ million)
Average assets
size
($ million)
0.83
7.52
19.42
830.65
0.34
5.19
7.9
42.4
0.686
0.834
0.06
0.83
1.48
13.32
0.07
0.88
1.7
12.3
0.608
0.908
jbell on DSKJLSW7X2PROD with PROPOSALS
Industries, excluding Subsectors 111 and 112
20th percentile ............................................
80th percentile ............................................
Industries in Subsectors 111 and 112
20th percentile ............................................
80th percentile ............................................
Estimation of Size Standards Based on
Industry Factors
An estimated size standard supported
by each industry factor is derived by
comparing its value for a specific
industry to the 20th percentile and 80th
percentile values for that factor. If an
industry’s value for a particular factor is
near the 20th percentile value in the
distribution, the supported size
standard will be one that is close to the
20th percentile value of size standards
for industries in the size standards
group, which is $8.0 million. If a factor
for an industry is close to the 80th
percentile value of that factor, it would
support a size standard that is close to
the 80th percentile value in the
distribution of size standards, which is
$35.0 million. For a factor that is within,
above, or below the 20–80th percentile
range, the size standard is calculated
using linear interpolation based on the
20th percentile and 80th percentile
values for that factor and the 20th
percentile and 80th percentile values of
size standards.
For example, if an industry’s simple
average receipts are $1.9 million, that
would support a size standard of $12.5
million. According to Table 2, the 20th
percentile and 80th percentile values of
average receipts are $0.83 million and
$7.52 million, respectively. The $1.9
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Jkt 253001
4-Firm
concentration
ratio
(%)
Simple average
receipts size
($ million)
million is 15.9% between the 20th
percentile value ($0.83 million) and the
80th percentile value ($7.52 million) of
simple average receipts (($1.9
million¥$0.83 million) ÷ ($7.52
million¥$0.83 million) = 0.159 or
15.9%). Applying this percentage to the
difference between the 20th percentile
value ($8 million) and 80th percentile
($35.0 million) value of size standards
and then adding the result to the 20th
percentile size standard value ($8.0
million) yields a calculated size
standard value of $12.32 million
([{$35.0 million¥$8.0 million} * 0.159]
+ $8.0 million = $12.32 million). The
final step is to round the calculated
$12.32 million size standard to the
nearest $500,000, which in this example
yields $12.5 million. This procedure is
applied to calculate size standards
supported by other industry factors.
Detailed formulas involved in these
calculations are presented in SBA’s
Methodology, which is available on its
website at www.sba.gov/size.
Derivation of Size Standards Based on
Federal Contracting Factor
Besides industry structure, SBA also
evaluates Federal contracting data to
assess the success of small businesses in
getting Federal contracts under the
existing size standards. For each
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Fmt 4702
Sfmt 4702
Gini coefficient
industry with $20 million or more in
annual Federal contract dollars, SBA
evaluates the small business share of
total Federal contract dollars relative to
the small business share of total
industry receipts. All other factors being
equal, if the share of Federal contracting
dollars awarded to small businesses in
an industry is significantly less than the
small business share of that industry’s
total receipts, a justification would exist
for considering a size standard higher
than the current size standard.
Conversely, if the small business share
of Federal contracting activity is near or
above the small business share of total
industry receipts, this will support the
current size standard.
SBA increases the existing size
standards by certain percentages when
the small business share of total
industry receipts exceeds the small
business share of total Federal contract
dollars by 10 or more percentage points.
Proposed percentage increases generally
reflect receipts levels needed to bring
the small business share of Federal
contracts on par with the small business
share of industry receipts. These
proposed percentage increases for
receipts-based size standards are given
in Table 3, Proposed Adjustments to
Size Standards Based on Federal
Contracting Factor.
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Federal Register / Vol. 85, No. 220 / Friday, November 13, 2020 / Proposed Rules
TABLE 3—PROPOSED ADJUSTMENTS TO SIZE STANDARDS BASED ON FEDERAL CONTRACTING FACTOR
Percentage difference between the small business shares of total Federal contract
dollars in an industry and of total industry receipts
Size standards
Receipts-based standards:
< $15.0 million ..........................................................
$15.0 million to < $25.0 million ................................
$25.0 million to < $41.5 million ................................
For example, if an industry with the
current size standard of $8.0 million
had an average of $50 million in Federal
contracting dollars, of which 15% went
to small businesses, and if that small
businesses accounted for 40% of total
receipts of that industry, the small
business share of total Federal contract
dollars would be 25% less than the
small business share of total industry
receipts (40%–15%). According to the
adjustment above, the new size standard
for the Federal contracting factor for that
industry would be set by multiplying
the current $8.0 million standard by 1.3
(i.e., 30% increase) and then by
rounding the result to the nearest
$500,000, yielding a size standard of
$10.5 million.
SBA evaluated the small business
share of total Federal contract dollars for
the 61 industries covered by this
proposed rule—31 in Sector 54, and 30
in Sector 56—that had $20 million or
more in average annual Federal contract
dollars during fiscal years 2016–2018.
The Federal contracting factor was
significant (i.e., the difference between
the small business share of total
industry receipts and small business
share of Federal contracting dollars was
10 percentage points or more) in 28 of
these industries, prompting an upward
adjustment of their existing size
>¥10%
¥10% to ¥30%
No change .........................
No change .........................
No change .........................
Increase 30% ....................
Increase 20% ....................
Increase 15% ....................
standards based on that factor. For the
remaining 33 industries that averaged
$20 million or more in average annual
contract dollars, the Federal contracting
factor was not significant, and the
existing size standard was applied for
that factor. For industries with less than
$20 million in average annual contract
dollars, no size standard was calculated
for the Federal contracting factor.
<¥ 30%
Increase 60%.
Increase 40%.
Increase 25%.
Calculated Size Standards Based on
Industry and Federal Contracting
Factors
Table 4, Size Standards Supported by
Each Factor for Each Industry
(Receipts), shows the results of analyses
of industry and Federal contracting
factors for each industry and
subindustry (exception) covered by this
proposed rule. NAICS industries in
columns 2, 3, 4, 5, 6, 7, and 8 show two
numbers. The upper number is the
value for the industry or Federal
contracting factor shown on the top of
the column and the lower number is the
size standard supported by that factor.
Column 9 shows a calculated new size
standard for each industry. This is the
average of the size standards supported
by each factor (the size standard for
average firm size is an average of size
standards supported by simple average
firm size and weighted average firm
size), rounded to the nearest $500,000
for non-agriculture industries and
rounded to the nearest $250,000 for
agriculture industries. Analytical details
involved in the averaging procedure are
described in SBA’s Methodology, which
is available on its website at
www.sba.gov/size. For comparison with
the calculated new size standards, the
current size standards are in column 10
of Table 4.
Derivation of Overall Industry Size
Standard
The SBA’s Methodology presented
above results in five separate size
standards based on evaluation of the
five primary factors (i.e., four industry
factors and one Federal contracting
factor). SBA typically derives an
industry’s overall size standard by
assigning equal weights to size
standards supported by each of these
five factors. However, if necessary,
SBA’s Methodology would allow
assigning different weights to some of
these factors in response to its policy
decisions and other considerations. For
detailed calculations, see SBA’s
Methodology, available on its website at
www.sba.gov/size.
TABLE 4—SIZE STANDARDS SUPPORTED BY EACH FACTOR FOR EACH INDUSTRY (RECEIPTS)
jbell on DSKJLSW7X2PROD with PROPOSALS
[Upper value = calculated factor, lower value = size standard supported]
NAICS code
NAICS industry title
Type
Simple
average
firm size
($ million)
Weighted
average
firm size
($ million)
Average
assets size
($ million)
Four-firm
ratio
%
Gini
coefficient
Federal
contract
factor
(%)
Calculated
size
standard
($ million)
Current
size
standard
($ million)
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
541110
Offices of Lawyers .............................................
541191
Title Abstract and Settlement Offices ................
541199
All Other Legal Services ....................................
541211
Offices of Certified Public Accountants .............
541213
Tax Preparation Services ..................................
541214
Payroll Services .................................................
541219
Other Accounting Services ................................
541310
Architectural Services ........................................
541320
Landscape Architectural Services .....................
541330
Engineering Services .........................................
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Jkt 253001
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
PO 00000
Frm 00007
$1.5
10.5
1.3
9.5
1.1
9.0
1.4
10.5
0.3
6.0
6.5
30.5
0.5
6.5
1.4
10.5
0.6
7.0
4.5
23.0
Fmt 4702
$223.3
15.0
278.1
16.5
95.9
10.5
2,879.6
41.5
641.9
28.5
2,094.0
41.5
282.8
17.0
54.8
9.0
4.3
7.5
1,396.0
41.5
Sfmt 4702
$0.3
8.0
0.5
8.5
0.4
8.0
0.5
8.5
0.2
7.0
2.9
22.5
0.2
7.0
0.5
9.0
0.2
7.0
1.7
16.0
2.7
$6.0
27.5
$23.5
29.6
$25.0
37.2
$31.0
....................
49.6
$40.5
18.8
$16.5
5.8
$6.5
4.5
$6.0
13.1
$12.0
E:\FR\FM\13NOP1.SGM
0.775
$24.0
0.763
$22.0
0.792
$27.5
0.782
$25.5
0.708
$12.0
0.854
$38.5
0.751
$20.0
0.748
$19.5
0.642
$6.0
0.839
$36.0
13NOP1
¥20.8
$15.5
....................
$13.5
$12.0
17.0
12.0
¥38.8
$19.0
¥14.0
$26.5
....................
18.0
12.0
23.5
22.0
12.0
22.0
....................
34.5
22.0
¥35.3
$31.0
¥12.8
$10.5
....................
17.5
22.0
11.0
8.0
0.1
$16.5
6.5
8.0
22.5
16.5
72591
Federal Register / Vol. 85, No. 220 / Friday, November 13, 2020 / Proposed Rules
TABLE 4—SIZE STANDARDS SUPPORTED BY EACH FACTOR FOR EACH INDUSTRY (RECEIPTS)—Continued
[Upper value = calculated factor, lower value = size standard supported]
NAICS code
NAICS industry title
Type
Simple
average
firm size
($ million)
Weighted
average
firm size
($ million)
Average
assets size
($ million)
Four-firm
ratio
%
Gini
coefficient
Federal
contract
factor
(%)
Calculated
size
standard
($ million)
Current
size
standard
($ million)
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
Except Military and Aerospace Equipment and Military
Weapons.
Except Contracts and Subcontracts for Engineering
Services Awarded Under the National Energy Policy
Act of 1992.
Except Marine Engineering and Naval Architecture ......
Factor ............
Size Std .........
Factor ............
Size Std .........
3,225.7
41.5
....................
70,551.0
41.5
....................
1,271.8
41.5
....................
35.7
$30.0
....................
0.883
$41.5
....................
12.6
$41.5
....................
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
2,639.7
41.5
0.4
6.0
0.4
6.0
4.5
22.5
0.7
7.5
3.0
16.5
0.7
7.5
1.2
9.5
0.5
6.5
0.8
8.0
2.0
12.5
4.3
22.0
5.8
28.0
1.9
12.0
1.6
11.0
2.6
15.0
1.1
9.0
2.0
12.5
0.6
7.5
1.5
11.0
1.2
9.5
3.5
19.0
2.9
16.0
1.3
10.0
8.4
38.5
2.3
14.0
3.3
18.0
3.8
20.0
3.8
20.0
1.8
12.0
3.6
19.5
0.4
6.5
0.5
6.5
1.9
12.0
1.1
9.0
1.0
8.5
10.1
41.5
10.8
41.5
1.5
10.5
13.8
41.5
2.0
12.5
73,130
41.5
2.9
7.5
18.1
8.0
201.6
14.0
57.4
9.5
111.5
11.0
4.6
7.5
37.4
8.5
6.7
7.5
14.7
8.0
616.8
28.0
3,438.4
41.5
7,617.4
41.5
268.0
16.5
2,532.2
41.5
1,154.7
41.5
95.4
10.5
113.9
11.0
17.8
8.0
51.8
9.0
135.7
12.0
208.8
14.5
896.3
37.0
137.2
12.0
283.3
17.0
79.4
10.0
622.5
28.0
265.8
16.0
156.6
12.5
89.4
10.5
339.8
18.5
129.9
11.5
5.4
7.5
218.3
14.5
106.9
11.0
194.6
14.0
402.8
21.0
2,312.4
41.5
25.7
8.0
665.1
29.5
242.2
15.5
1,055.9
41.5
0.1
7.0
0.1
7.0
1.7
15.5
0.3
7.5
1.3
13.5
0.2
7.0
0.5
8.5
0.2
7.0
0.3
7.5
0.7
9.5
1.3
13.0
1.7
15.5
0.5
9.0
0.5
9.0
0.7
10.0
0.4
8.0
0.7
10.0
0.2
7.5
0.6
9.5
0.4
8.5
2.4
19.0
0.9
11.0
0.4
8.0
2.6
20.5
0.8
10.5
2.8
21.5
1.4
14.0
1.5
14.0
0.6
9.0
1.3
13.5
0.2
7.0
0.2
7.0
0.6
9.5
0.3
7.5
0.3
8.0
5.9
39.0
13.5
41.5
0.6
9.5
3.8
27.5
0.4
8.0
52.5
$41.5
7.2
$7.5
12.5
$11.5
43.2
$35.5
16.6
$15.0
13.2
$12.0
2.4
$6.0
24.3
$21.0
3.5
$6.0
15.3
$14.0
11.8
$11.0
24.4
$21.0
59.2
$41.5
20.1
$17.5
27.9
$23.5
42.7
$35.0
8.1
$8.0
15.3
$13.5
9.8
$9.5
8.4
$8.5
11.6
$11.0
31.9
$26.5
30.1
$25.5
21.6
$18.5
35.7
$30.0
26.0
$22.0
54.8
$41.5
24.4
$21.0
41.4
$34.0
13.1
$12.0
21.6
$18.5
28.3
$24.0
7.9
$8.0
39.3
$32.5
9.2
$9.0
19.1
$17.0
....................
0.882
$41.5
0.673
$6.0
0.702
$11.0
0.861
$40.0
0.730
$16.0
0.766
$22.5
0.640
$6.0
0.756
$21.0
0.688
$8.5
0.741
$18.0
0.813
$31.0
0.859
$39.5
0.866
$40.5
0.829
$34.0
0.824
$33.0
0.843
$36.5
0.781
$25.5
0.814
$31.0
0.735
$17.0
0.773
$24.0
0.787
$26.5
0.830
$34.0
0.801
$29.0
0.757
$21.0
0.838
$35.5
0.807
$30.0
0.842
$36.5
0.781
$25.5
0.839
$36.0
0.780
$25.0
0.815
$31.5
0.727
$15.5
0.674
$6.0
0.840
$36.0
0.529
$6.0
0.784
$26.0
0.818
$32.0
0.848
$37.5
0.761
$21.5
0.841
$36.0
0.797
$28.0
541340
Drafting Services ...............................................
541350
Building Inspection Services .............................
541360
Geophysical Surveying and Mapping Services
541370 Surveying and Mapping (except Geophysical)
Services.
541380 Testing Laboratories ..........................................
541410
Interior Design Services ....................................
541420
Industrial Design Services .................................
541430
Graphic Design Services ...................................
541490
Other Specialized Design Services ...................
541511
Custom Computer Programming Services ........
541512
Computer Systems Design Services .................
541513
Computer Facilities Management Services .......
541519
Other Computer Related Services ....................
541611 Administrative Management and General Management Consulting Services.
541612 Human Resources Consulting Services ............
541613
Marketing Consulting Services ..........................
541614 Process, Physical Distribution, and Logistics
Consulting Services.
541618 Other Management Consulting Services ..........
541620
Environmental Consulting Services ...................
jbell on DSKJLSW7X2PROD with PROPOSALS
541690 Other Scientific and Technical Consulting Services.
541720 Research and Development in the Social
Sciences and Humanities.
541810 Advertising Agencies .........................................
541820
Public Relations Agencies .................................
541830
Media Buying Agencies .....................................
541840
Media Representatives ......................................
541850
Outdoor Advertising ...........................................
541860
Direct Mail Advertising .......................................
541870
Advertising Material Distribution Services .........
541890
Other Services Related to Advertising ..............
541910
Marketing Research and Public Opinion Polling
541921
Photography Studios, Portrait ...........................
541922
Commercial Photography ..................................
541930
Translation and Interpretation Services ............
541940
Veterinary Services ...........................................
541990 All Other Professional, Scientific and Technical
Services.
551111 Offices of Bank Holding Companies .................
551112
Offices of Other Holding Companies ................
561110
Office Administrative Services ...........................
561210
Facilities Support Services ................................
561311
Employment Placement Agencies .....................
VerDate Sep<11>2014
16:23 Nov 12, 2020
Jkt 253001
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Frm 00008
Fmt 4702
Sfmt 4702
....................
2.1
$6.0
25.6
$22.0
23.7
$20.5
E:\FR\FM\13NOP1.SGM
13NOP1
39.0
41.5
39.0
41.5
3.4
$41.5
....................
41.5
41.5
7.0
8.0
¥65.2
$13.0
¥3.5
$16.5
¥42.3
$23.0
¥16.8
$20.0
....................
10.0
8.0
25.0
16.5
14.0
16.5
16.5
16.5
6.5
8.0
....................
15.0
8.0
16.5
$8.0
....................
7.5
8.0
¥7.3
$30.0
8.0
$30.0
27.1
$30.0
11.6
$30.0
4.8
$16.5
20.8
$16.5
¥28.1
$20.0
¥11.2
$20.0
¥42.9
$23.0
3.2
$16.5
¥22.9
$20.0
¥21.7
$26.5
¥20.8
$20.0
5.6
$16.5
....................
12.0
8.0
20.5
30.0
27.0
30.0
32.5
30.0
21.0
30.0
21.5
16.5
25.5
16.5
14.5
16.5
17.5
16.5
13.0
16.5
13.5
16.5
15.5
16.5
24.5
22.0
22.5
16.5
15.0
16.5
28.5
16.5
....................
18.5
16.5
....................
30.5
16.5
....................
19.5
16.5
....................
25.0
16.5
¥42.3
$23.0
11.4
$16.5
....................
16.0
16.5
20.0
16.5
¥50.2
$13.0
1.3
$8.0
¥64.5
$13.0
¥34.1
$23.0
....................
14.0
8.0
8.0
8.0
20.0
8.0
9.0
8.0
17.0
16.5
34.0
22.0
....................
40.0
22.0
32.7
$8.0
¥5.2
$41.5
¥21.8
$34.5
11.0
8.0
32.5
41.5
21.0
30.0
72592
Federal Register / Vol. 85, No. 220 / Friday, November 13, 2020 / Proposed Rules
TABLE 4—SIZE STANDARDS SUPPORTED BY EACH FACTOR FOR EACH INDUSTRY (RECEIPTS)—Continued
[Upper value = calculated factor, lower value = size standard supported]
NAICS code
NAICS industry title
Type
Simple
average
firm size
($ million)
Weighted
average
firm size
($ million)
Average
assets size
($ million)
Four-firm
ratio
%
Gini
coefficient
Federal
contract
factor
(%)
Calculated
size
standard
($ million)
Current
size
standard
($ million)
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
561312
Executive Search Services ................................
561320
Temporary Help Services ..................................
561330
Professional Employer Organizations ...............
561410
Document Preparation Services ........................
561421
Telephone Answering Services .........................
561422 Telemarketing Bureaus and Other Contact
Centers.
561431 Private Mail Centers ..........................................
561439 Other Business Service Centers (including
Copy Shops).
561440 Collection Agencies ...........................................
561450
Credit Bureaus ...................................................
561491
Repossession Services .....................................
561492
Court Reporting and Stenotype Services ..........
561499
All Other Business Support Services ................
561510
Travel Agencies .................................................
561520
Tour Operators ..................................................
561591
Convention and Visitors Bureaus ......................
561599 All Other Travel Arrangement and Reservation
Services.
561611 Investigation Services ........................................
561612
Security Guards and Patrol Services ................
561613
Armored Car Services .......................................
561621
Security Systems Services (except Locksmiths)
561622
Locksmiths .........................................................
561710
Exterminating and Pest Control Services .........
561720
Janitorial Services .............................................
561730
Landscaping Services .......................................
561740
Carpet and Upholstery Cleaning Services ........
561790
Other Services to Buildings and Dwellings .......
561910
Packaging and Labeling Services .....................
561920
Convention and Trade Show Organizers ..........
561990
All Other Support Services ................................
562111
Solid Waste Collection ......................................
562112
Hazardous Waste Collection .............................
562119
Other Waste Collection .....................................
562211
Hazardous Waste Treatment and Disposal ......
562212
Solid Waste Landfill ...........................................
562213
Solid Waste Combustors and Incinerators ........
jbell on DSKJLSW7X2PROD with PROPOSALS
562219 Other Nonhazardous Waste Treatment and
Disposal.
562910 Remediation Services ........................................
562920
Materials Recovery Facilities .............................
562991
Septic Tank and Related Services ....................
562998 All Other Miscellaneous Waste Management
Services.
VerDate Sep<11>2014
16:23 Nov 12, 2020
Jkt 253001
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
Factor ............
Size Std .........
PO 00000
Frm 00009
1.0
8.5
9.0
41.0
30.7
41.5
0.8
8.0
1.5
10.5
6.1
29.5
0.5
6.5
2.1
13.5
3.1
17.0
19.3
41.5
0.8
8.0
0.6
7.0
2.3
14.0
1.4
10.5
2.0
13.0
1.7
11.5
8.6
39.5
1.1
9.0
3.8
20.0
22.7
41.5
2.7
15.5
0.5
6.5
0.9
8.5
0.7
7.5
0.6
7.0
0.4
6.5
0.5
6.5
4.0
21.0
2.6
15.5
1.7
11.5
5.4
26.5
7.0
33.0
2.1
13.0
15.6
41.5
7.5
35.0
56.6
41.5
3.4
18.5
4.3
22.0
5.2
25.5
0.8
8.0
1.7
11.5
Fmt 4702
61.7
9.5
1,130.0
41.5
5,898.1
41.5
74.8
10.0
42.7
9.0
312.0
17.5
15.1
8.0
452.9
22.5
123.3
11.5
824.1
35.0
7.6
7.5
35.1
8.5
138.8
12.0
303.8
17.5
52.5
9.0
28.5
8.5
469.4
23.0
318.4
18.0
908.2
37.5
509.9
24.5
479.5
23.5
5.0
7.5
328.1
18.5
201.8
14.0
168.6
13.0
14.3
8.0
13.0
8.0
59.3
9.5
287.8
17.0
119.3
11.5
3,163.1
41.5
129.9
11.5
103.4
11.0
569.0
26.5
834.7
35.0
1,040.3
41.5
29.0
8.5
128.5
11.5
276.0
16.5
16.1
8.0
45.4
9.0
Sfmt 4702
0.2
7.0
1.7
15.5
4.9
33.5
0.3
7.5
0.7
9.5
2.0
17.0
0.2
7.0
0.7
10.0
1.1
12.0
6.7
41.5
0.2
7.0
0.2
7.5
1.0
11.5
0.5
8.5
0.9
11.0
0.5
9.0
3.7
27.0
0.3
7.5
0.8
10.5
5.1
35.0
1.2
12.5
0.2
7.0
0.3
7.5
0.2
7.0
0.2
7.0
0.1
7.0
0.2
7.0
1.5
14.5
0.9
11.0
0.8
10.5
3.2
23.5
4.1
29.0
1.2
13.0
10.4
41.5
6.8
41.5
43.5
41.5
2.8
21.5
2.0
17.0
2.5
20.0
0.4
8.0
0.9
11.0
17.9
$16.0
14.0
$13.0
43.6
$36.0
26.6
$22.5
24.0
$20.5
21.2
$18.5
13.5
$12.5
43.0
$35.5
15.2
$13.5
59.9
$41.5
17.1
$15.0
22.5
$19.5
23.7
$20.5
25.8
$22.0
15.4
$14.0
19.3
$17.0
31.9
$26.5
36.2
$30.0
35.1
$29.5
89.6
$41.5
23.9
$20.5
8.3
$8.5
28.1
$24.0
11.2
$10.5
9.6
$9.5
9.4
$9.0
7.1
$7.5
14.0
$13.0
24.0
$20.5
10.9
$10.5
46.6
$38.5
43.5
$36.0
41.4
$34.0
49.9
$41.0
64.6
$41.5
92.5
$41.5
40.2
$33.5
13.3
$12.0
28.8
$24.5
11.4
$10.5
26.2
$22.5
E:\FR\FM\13NOP1.SGM
0.726
$15.5
0.819
$32.0
0.865
$40.5
0.790
$27.0
0.740
$18.0
0.827
$33.5
0.526
$6.0
0.805
$29.5
0.792
$27.5
0.878
$41.5
0.663
$6.0
0.743
$18.5
0.810
$30.5
0.798
$28.5
0.741
$18.0
0.745
$18.5
0.840
$36.0
0.810
$30.5
0.845
$37.0
0.871
$41.5
0.797
$28.0
0.603
$6.0
0.752
$20.0
0.785
$26.0
0.688
$8.5
0.673
$6.0
0.645
$6.0
0.781
$25.5
0.800
$28.5
0.779
$25.0
0.821
$32.5
0.789
$27.0
0.779
$25.0
0.840
$36.0
0.845
$37.0
0.863
$40.0
0.711
$12.5
0.774
$24.0
0.753
$20.5
0.642
$6.0
0.714
$13.0
13NOP1
....................
12.0
30.0
48.5
$30.0
80.2
$30.0
40.9
$16.5
....................
26.5
30.0
14.5
16.5
¥19.9
$20.0
....................
22.5
16.5
8.5
16.5
....................
23.5
16.5
43.6
$16.5
22.4
$16.5
....................
17.0
16.5
36.0
16.5
9.0
16.5
27.3
$16.5
¥17.6
$20.0
10.4
$22.0
....................
14.0
16.5
36.5
30.0
16.5
16.5
19.0
16.5
19.0
22.0
13.5
22.0
....................
13.5
22.0
67.1
$22.0
¥27.2
$26.5
1.3
$22.0
....................
28.5
22.0
21.5
22.0
25.5
22.0
38.0
22.0
0.2
$22.0
....................
20.5
22.0
7.0
22.0
21.5
$12.0
26.6
$19.5
11.3
$8.0
....................
¥46.7
$13.0
¥13.8
$15.5
46.7
$12.0
¥28.2
$15.5
38.2
$41.5
33.3
$41.5
¥26.1
$41.5
¥10.2
$41.5
....................
15.5
12.0
15.0
19.5
8.5
8.0
7.5
6.0
8.0
8.0
17.0
12.0
17.5
12.0
14.5
12.0
34.0
41.5
31.0
41.5
25.0
41.5
39.0
41.5
39.0
41.5
....................
41.0
41.5
¥22.5
$41.5
¥8.3
$22.0
....................
24.5
41.5
18.5
22.0
21.5
22.0
9.2
$8.0
....................
8.0
8.0
14.5
8.0
72593
Federal Register / Vol. 85, No. 220 / Friday, November 13, 2020 / Proposed Rules
Evaluation of Size Standards for
Subindustry Categories or ‘‘Exceptions’’
In accordance with SBA’s approach to
evaluating size standards for
subindustry categories (or
‘‘exceptions’’), SBA has evaluated the
three (3) exceptions covered by this
proposed rule using the procedures
described in the revised SBA’s
Methodology. The results of that
analysis are discussed in the following
subsection.
Exceptions to NAICS 541330: Military
and Aerospace Equipment and Military
Weapons; Contracts and Subcontracts
for Engineering Services Awarded
Under the National Energy Policy Act of
1992; Marine Engineering and Naval
Architecture
Currently, NAICS 541330 has four
size standards that apply to Federal
contracts for different types of
engineering services. The $16.5 million
size standard is for general engineering
services, while the $41.5 million size
standard for the three exceptions apply
to specialized types of engineering
services that the Federal Government
procures. These exceptions apply only
to Federal contracts for those services.
In the prior comprehensive review, 16
commenters addressed SBA’s proposal
to retain the then current $27.0 million
size standard for the exceptions. All
believed that the $27.0 million size
standard was too low and needed to be
increased. Commenters expressed
concern that small firms that exceed this
size standard would not be able to
compete with the midsize and very large
firms that exist in this market.
Commenters also pointed out that
contracts for the exceptions tend to be
large already and were trending
upwards each year.
SBA agreed with commenters that the
size standard for the two engineering
‘‘exceptions’’ (Military and Aerospace
Equipment and Military Weapons, and
Marine Engineering and Naval
Architecture) should be increased, and
as such, SBA adopted a size standard of
$35.5 million for all three of the
exceptions.1 Thereafter, to account for
inflation during the period, SBA
increased the $35.5 million size
standard for the three exceptions to
$38.5 Million in 2014 (79 FR 33647,
June 12, 2014), and to the current
maximum size level of $41.5 in 2019 (84
FR 34261, July 18, 2019).
As noted previously, the data from the
Economic Census special tabulation are
limited down to the 6-digit NAICS
industry level and hence do not provide
data to assess economic characteristics
at the subindustry level. For example,
the Economic Census data for NAICS
541330 are aggregates of both general
engineering services and specialized
engineering services under the three
‘‘exceptions.’’ The lack of relevant data
at the subindustry level makes it
challenging to determine whether these
size standards (‘‘exceptions’’) should be
revised or left unchanged. Thus, the
results based on the Economic Census
data may not accurately reflect the
characteristics of businesses providing
specialized services included under
those ‘‘exceptions.’’
To determine whether the Agency
should propose revising the three
exceptions under NAICS 541330, SBA
evaluated the data from FPDS–NG and
SAM. From FPDS–NG, SBA first
identified Product Service Codes (PSCs)
that correspond to each specific
subindustry activity or ‘‘exception’’
under that NAICS code and then
identified firms that are active in
Federal contracting involving those
PSCs. Including the exceptions, SBA
identified a total of 1,257 PSCs
corresponding to the activity of
engineering services. The total average
contract dollars obligated under these
PSCs was $29.9 billion. From this
group, SBA identified a subgroup of 168
PSCs corresponding to the Military and
Aerospace Equipment and Military
Weapons exception, and 40 PSCs
corresponding to the Marine
Engineering and Naval Architecture
exception. The total average contract
dollars obligated under these PSCs was
$3.2 billion and $1.9 billion,
respectively.
The data for fiscal year 2018 showed
numerous firms doing contracts under
Military and Aerospace Equipment and
Military Weapons and Marine
Engineering and Naval Architecture.
SBA analyzed those firms’ revenue and
employment data from SAM and
contract dollars from FPDS–NG to
evaluate industry and Federal
procurement factors. These results,
presented in Table 4 of this proposed
rule, support a size standard of $39.0
million for the Military and Aerospace
Equipment and Military Weapons
Exception and $41.5 million for the
Marine Engineering and Naval
Architecture. The FPDS–NG showed
very few actions involving Contracts
and Subcontracts for Engineering
Services Awarded Under the National
Energy Policy Act of 1992. However, for
purposes of contracts and subcontracts,
the National Energy Policy Act of 1992
requires that the applicable size
standard must be established for
Military and Aerospace Equipment and
Military Weapons (106 Stat. 2776,
3133).
Summary of Calculated Size Standards
Of the 91 industries and 3
subindustries (i.e. exceptions) reviewed
in this proposed rule, the results from
analyses of the latest available data on
the five primary factors from Table 4,
Size Standards Supported by Each
Factor for Each Industry (millions of
dollars), above, would support
increasing size standards for 46
industries, decreasing size standards for
43 industries and 3 subindustries, and
maintaining size standards for 6
industries. Table 5, Summary of
Calculated Size Standards, summarizes
these results by NAICS sector.
jbell on DSKJLSW7X2PROD with PROPOSALS
TABLE 5—SUMMARY OF CALCULATED SIZE STANDARDS
Number of
size standards
reviewed
Number of
size standards
increased
Number of
size standards
decreased
Number of
size standards
maintained
Professional, Scientific and Technical Services ...............
Manag6ment of Companies and Enterprises ...................
Administrative and Support and Waste Management
and Remediation Services.
48
2
44
27
2
17
18
0
24
3
0
3
...........................................................................................
94
46
42
6
Sector
Sector name
54 ......................
55 ......................
56 ......................
Total ...........
1 As required by law, SBA also adopted the $35.5
million size standard for the third ‘‘exception’’ to
NAICS 541330 (Contracts and Subcontracts for
Engineering Services Awarded Under the National
VerDate Sep<11>2014
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Energy Policy Act of 1992). Section 3021(b)(1) of
Public Law 102–486, the National Energy Policy
Act of 1992 (106 Stat. 2776, 3133) states that ‘‘for
purposes of contracts and subcontracts requiring
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engineering services (awarded under this Act) the
applicable size standard shall be that established for
Military and Aerospace Equipment and Military
Weapons.’’
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Federal Register / Vol. 85, No. 220 / Friday, November 13, 2020 / Proposed Rules
Evaluation of SBA Loan Data
Before proposing or deciding on an
industry’s size standard revision, SBA
also considers the impact of size
standards revisions on SBA’s loan
programs. Accordingly, SBA examined
its internal 7(a) and 504 loan data for
fiscal years 2016–2018 to assess whether
the calculated size standards in Table 4
(above) need further adjustments to
ensure credit opportunities for small
businesses through those programs. For
the industries reviewed in this proposed
rule, the data shows that it is mostly
businesses much smaller than the
current or proposed size standards that
receive SBA’s 7(a) and 504 loans. For
example, for industries covered by this
proposed rule, more than 98.8% of 7(a)
and 504 loans in fiscal years 2016–2018
went to businesses below the current or
calculated size standards.
Proposed Changes to Size Standards
Based on the analytical results in
Table 4 and considerations of the
impacts of calculated size standards in
terms of access by currently small
businesses to SBA’s loans, as discussed
above, of a total of 94 industries or
subindustries (exceptions) with
receipts-based size standards in Sectors
54, 55, and 56 that are covered by this
proposed rule, and considering the
current situation due to the COVID–19
related national emergency and its
impacts on small businesses and the
overall economy, SBA proposes to
increase size standards for 46 industries,
and retain the current size standards for
the remaining 48 industries or
subindustries in those sectors.
Special Considerations
On March 13, 2020, the ongoing
Coronavirus Disease 2019 (COVID–19)
was declared a pandemic of enough
severity and magnitude to warrant an
emergency declaration for all states,
territories, and the District of Columbia.
With the COVID–19 emergency, many
small businesses nationwide are
experiencing economic hardship as a
direct result of the Federal, State, and
local public health measures that are
being taken to minimize the public’s
exposure to the virus. These measures,
some of which are governmentmandated, are being implemented
nationwide and include the closures of
restaurants, bars, and gyms. In addition,
based on the advice of public health
officials, other measures, such as
keeping a safe distance from others or
even stay-at-home orders, are being
implemented, resulting in a dramatic
decrease in economic activity as the
public avoids malls, retail stores, and
other businesses.
The Coronavirus Aid, Relief, and
Economic Security Act (the CARES Act
or the Act) (Pub. L. 116–136) was signed
on March 27, 2020, to provide
emergency assistance and health care
response for individuals, families, and
businesses affected by the coronavirus
pandemic. Section 1102 of the Act
temporarily permits SBA to guarantee
100% of 7(a) loans under a new program
titled the Paycheck Protection Program
(PPP). Section 1106 of the Act provides
for forgiveness of up to the full principal
amount of qualifying loans guaranteed
under the PPP. The PPP and loan
forgiveness are intended to provide
economic relief to small businesses
nationwide adversely impacted by
COVID–19. On April 24, 2020,
additional funding for the CARES Act,
including for the PPP, was provided.
The Paycheck Protection Program and
Health Care Enhancement Act, Public
Law 116–139 (April 24, 2020).
The Agency is following closely the
development of the pandemic and the
economic situation and recovery. The
consequence of the initial response of
the public to the COVID–19 pandemic
as well as the different measures taken
by the Government to contain it (e.g.,
stay at homestay-at-home orders, social
distancing, etc.) have resulted in the
present economic decline. A variety of
economic indicators such as the Gross
Domestic Product (GDP) and the
unemployment rate shows that this
recession is significantly worse than any
other recession since World War II. The
GDP decreased nearly 5%, and the
personal consumption in goods and
services decreased 6.9% in the first
quarter of 2020. The Bureau of
Economic Analysis (BEA) third estimate
for the second quarter of 2020 shows
that the GDP decreased 31.4%, and the
personal consumption in goods and
services decreased 33.2%; In August
2020, personal income decreased 2.7%,
after having decreased by a lower
percentage in June (1.2%) and slightly
increased in July 2020 (0.5%). In
September 2020, the unemployment rate
declined to 7.9% from August 2020,
when the unemployment rate was 8.4%.
After reaching 14.7% in April 2020, the
unemployment rate has been decreasing
from May to September 2020, but still
it is greater than in February 2020 when
it was 3.5%. For the month of
September 2020, non-farm payroll
increased 661,000 from August 2020,
but the decrease in employment since
February 2020 is about 10.5 million.
Specifically, for the sectors evaluated in
this proposed rule, more recent data in
September 2020 shows that the
unemployment rate for professional and
technical services was 5.0%;
management, administrative, and waste
services was 10.0%; and administrative
and support services was 10.2%. In
September 2019, the unemployment
rates for these sectors were 2.5%, 4.7%
and 4.9%, respectively.2 The latest
Federal Reserve Board’s Monetary
Policy Report shows that in general the
most impacted firms in these sectors are
the small businesses.3
Accordingly, in view of the above
impacts on small businesses from the
COVID–19 pandemic and Federal
Government efforts to provide relief to
small businesses and support to the
overall economy, SBA proposes to adopt
increases to size standards for 46
industries and retain the current size
standards for 48 industries or
subindustries for a vast majority of
which analytical results suggested their
size standards could be lowered.
The proposed size standards are
presented in Table 6, Proposed Size
Standards Revisions. Also presented in
Table 6 are current and calculated size
standards for comparison.
jbell on DSKJLSW7X2PROD with PROPOSALS
TABLE 6—PROPOSED SIZE STANDARDS REVISIONS
Calculated
size standard
($ million)
NAICS code
NAICS industry title
541110 ..............
541191 ..............
Offices of Lawyers ........................................................................................
Title Abstract and Settlement Offices ..........................................................
2 Bureau of Labor Statistics, Table A–31,
Unemployed persons by industry, class of worker,
and sex. See https://www.bls.gov/cps/cpsaat26.htm.
3 Board of Governors of the Federal Reserve
System (June 2020), Monetary Policy Report, p. 24
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(see https://www.federalreserve.gov/
monetarypolicy/files/20200612_mprfullreport.pdf)
and U.S. Census Bureau, see https://
portal.census.gov/pulse/data. The latter is a recent
survey created by the Census Bureau to provide
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$13.5
17.0
Proposed
size standard
($ million)
$13.5
17.0
Current size
standard
($ million)
$12.0
12.0
high-frequency, detailed information on
participation in small business-specific initiatives
such as the PPP.
E:\FR\FM\13NOP1.SGM
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72595
TABLE 6—PROPOSED SIZE STANDARDS REVISIONS—Continued
jbell on DSKJLSW7X2PROD with PROPOSALS
NAICS code
541199
541211
541213
541214
541219
541310
541320
541330
541340
541350
541360
541370
541380
541410
541420
541430
541490
541511
541512
541513
541519
541611
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
541612
541613
541614
541618
541620
541690
541720
541810
541820
541830
541840
541850
541860
541870
541890
541910
541921
541922
541930
541940
541990
551111
551112
561110
561210
561311
561312
561320
561330
561410
561421
561422
561431
561439
561440
561450
561491
561492
561499
561510
561520
561591
561599
561611
561612
561613
561621
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
VerDate Sep<11>2014
Calculated
size standard
($ million)
NAICS industry title
All Other Legal Services ..............................................................................
Offices of Certified Public Accountants ........................................................
Tax Preparation Services .............................................................................
Payroll Services ............................................................................................
Other Accounting Services ...........................................................................
Architectural Services ...................................................................................
Landscape Architectural Services ................................................................
Engineering Services ...................................................................................
Drafting Services ..........................................................................................
Building Inspection Services ........................................................................
Geophysical Surveying and Mapping Services ............................................
Surveying and Mapping (except Geophysical) Services .............................
Testing Laboratories .....................................................................................
Interior Design Services ...............................................................................
Industrial Design Services ............................................................................
Graphic Design Services ..............................................................................
Other Specialized Design Services ..............................................................
Custom Computer Programming Services ...................................................
Computer Systems Design Services ............................................................
Computer Facilities Management Services ..................................................
Other Computer Related Services ...............................................................
Administrative Management and General Management Consulting Services.
Human Resources Consulting Services .......................................................
Marketing Consulting Services .....................................................................
Process, Physical Distribution, and Logistics Consulting Services .............
Other Management Consulting Services .....................................................
Environmental Consulting Services .............................................................
Other Scientific and Technical Consulting Services ....................................
Research and Development in the Social Sciences and Humanities .........
Advertising Agencies ....................................................................................
Public Relations Agencies ............................................................................
Media Buying Agencies ................................................................................
Media Representatives .................................................................................
Outdoor Advertising ......................................................................................
Direct Mail Advertising .................................................................................
Advertising Material Distribution Services ....................................................
Other Services Related to Advertising .........................................................
Marketing Research and Public Opinion Polling ..........................................
Photography Studios, Portrait ......................................................................
Commercial Photography .............................................................................
Translation and Interpretation Services .......................................................
Veterinary Services ......................................................................................
All Other Professional, Scientific and Technical Services ...........................
Offices of Bank Holding Companies ............................................................
Offices of Other Holding Companies ...........................................................
Office Administrative Services ......................................................................
Facilities Support Services ...........................................................................
Employment Placement Agencies ...............................................................
Executive Search Services ..........................................................................
Temporary Help Services .............................................................................
Professional Employer Organizations ..........................................................
Document Preparation Services ..................................................................
Telephone Answering Services ....................................................................
Telemarketing Bureaus and Other Contact Centers ....................................
Private Mail Centers .....................................................................................
Other Business Service Centers (including Copy Shops) ...........................
Collection Agencies ......................................................................................
Credit Bureaus .............................................................................................
Repossession Services ................................................................................
Court Reporting and Stenotype Services ....................................................
All Other Business Support Services ...........................................................
Travel Agencies ............................................................................................
Tour Operators .............................................................................................
Convention and Visitors Bureaus .................................................................
All Other Travel Arrangement and Reservation Services ............................
Investigation Services ..................................................................................
Security Guards and Patrol Services ...........................................................
Armored Car Services ..................................................................................
Security Systems Services (except Locksmiths) .........................................
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E:\FR\FM\13NOP1.SGM
Proposed
size standard
($ million)
Current size
standard
($ million)
18.0
23.5
12.0
34.5
17.5
11.0
6.5
22.5
7.0
10.0
25.0
14.0
16.5
6.5
15.0
7.5
12.0
20.5
27.0
32.5
21.0
21.5
18.0
23.5
22.0
34.5
22.0
11.0
8.0
22.5
8.0
10.0
25.0
16.5
16.5
8.0
15.0
8.0
12.0
30.0
30.0
32.5
30.0
21.5
12.0
22.0
22.0
22.0
22.0
8.0
8.0
16.5
8.0
8.0
16.5
16.5
16.5
8.0
8.0
8.0
8.0
30.0
30.0
30.0
30.0
16.5
25.5
14.5
17.5
13.0
13.5
15.5
24.5
22.5
15.0
28.5
18.5
30.5
19.5
25.0
16.0
20.0
14.0
8.0
20.0
9.0
17.0
34.0
40.0
11.0
32.5
21.0
12.0
26.5
36.5
16.5
14.5
22.5
8.5
23.5
17.0
36.0
9.0
14.0
19.0
19.0
13.5
13.5
28.5
21.5
25.5
38.0
20.5
25.5
16.5
17.5
16.5
16.5
16.5
24.5
22.5
16.5
28.5
18.5
30.5
19.5
25.0
16.5
20.0
14.0
8.0
20.0
9.0
17.0
34.0
40.0
11.0
41.5
30.0
30.0
30.0
36.5
16.5
16.5
22.5
16.5
23.5
17.0
36.0
16.5
16.5
19.0
22.0
22.0
22.0
28.5
22.0
25.5
38.0
22.0
16.5
16.5
16.5
16.5
16.5
16.5
22.0
16.5
16.5
16.5
16.5
16.5
16.5
16.5
16.5
16.5
8.0
8.0
8.0
8.0
16.5
22.0
22.0
8.0
41.5
30.0
30.0
30.0
30.0
16.5
16.5
16.5
16.5
16.5
16.5
16.5
16.5
16.5
16.5
22.0
22.0
22.0
22.0
22.0
22.0
22.0
22.0
13NOP1
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TABLE 6—PROPOSED SIZE STANDARDS REVISIONS—Continued
NAICS code
561622
561710
561720
561730
561740
561790
561910
561920
561990
562111
562112
562119
562211
562212
562213
562219
562910
562920
562991
562998
Calculated
size standard
($ million)
NAICS industry title
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
Locksmiths ....................................................................................................
Exterminating and Pest Control Services ....................................................
Janitorial Services ........................................................................................
Landscaping Services ..................................................................................
Carpet and Upholstery Cleaning Services ...................................................
Other Services to Buildings and Dwellings ..................................................
Packaging and Labeling Services ................................................................
Convention and Trade Show Organizers .....................................................
All Other Support Services ...........................................................................
Solid Waste Collection .................................................................................
Hazardous Waste Collection ........................................................................
Other Waste Collection ................................................................................
Hazardous Waste Treatment and Disposal .................................................
Solid Waste Landfill ......................................................................................
Solid Waste Combustors and Incinerators ...................................................
Other Nonhazardous Waste Treatment and Disposal .................................
Remediation Services ..................................................................................
Materials Recovery Facilities .......................................................................
Septic Tank and Related Services ...............................................................
All Other Miscellaneous Waste Management Services ...............................
Table 7, Summary of Proposed Size
Standards Revisions by Sector, below,
Proposed
size standard
($ million)
7.0
15.5
15.0
8.5
7.5
8.0
17.0
17.5
14.5
34.0
31.0
25.0
39.0
39.0
41.0
24.5
18.5
21.5
8.0
14.5
Current size
standard
($ million)
22.0
15.5
19.5
8.5
7.5
8.0
17.0
17.5
14.5
41.5
41.5
41.5
41.5
41.5
41.5
41.5
22.0
22.0
8.0
14.5
22.0
12.0
19.5
8.0
6.0
8.0
12.0
12.0
12.0
41.5
41.5
41.5
41.5
41.5
41.5
41.5
22.0
22.0
8.0
8.0
summarizes the proposed changes to
size standards by NAICS sector.
TABLE 7—SUMMARY OF PROPOSED SIZE STANDARDS REVISIONS BY SECTOR
Number of
size standards
reviewed
Number of
size standards
increased
Number of
size standards
decreased
Number of
size standards
maintained
Professional, Scientific and Technical Services ...............
Management of Companies and Enterprises ...................
Administrative and Support, Waste Management and
Remediation Services.
48
2
44
27
2
17
0
0
0
21
0
27
...........................................................................................
94
46
0
48
Sector
Sector name
54 ......................
55 ......................
56 ......................
Total ...........
Evaluation of Dominance in Field of
Operation
SBA has determined that for the
industries it has evaluated in this
proposed rule, no individual firm at or
below the proposed size standard would
be large enough to dominate its field of
operation. At the proposed size
standards levels, if adopted, the small
business share of total industry receipts
among those industries would be, on
average, 0.4 percent, varying from
0.005% to 4.8%. These market shares
effectively preclude a firm at or below
the proposed size standards from
exerting control on any of the
industries.
jbell on DSKJLSW7X2PROD with PROPOSALS
Alternatives Considered
By law, SBA is required to develop
numerical size standards for
establishing eligibility for Federal small
business assistance programs and to
review every five years all size
standards and make necessary
adjustments to reflect the current
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Jkt 253001
industry structure and Federal market
conditions. Other than varying the
levels of size standards by industry and
changing the measures of size standards
(e.g., using annual receipts vs. the
number of employees), no practical
alternatives exist to the systems of
numerical size standards.
The proposal is to increase size
standards where the data suggested
increases are warranted, and to retain,
in response to COVID–19 emergency
and resultant economic impacts on
small businesses, all current size
standards where the data suggested
lowering is appropriate.
Nonetheless, SBA considered two
other alternatives. Alternative Option
One was to propose changes exactly as
suggested by the analytical results. In
other words, option one would entail
increasing size standards for 46
industries, decreasing them for 42
industries, and retaining them at their
current levels for 6 industries.
Alternative Option Two was to retain all
current size standards.
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Alternative Option One would cause
a substantial number of currently small
businesses to lose their small business
status and hence to lose their access to
Federal small business assistance,
especially small business set-aside
contracts and SBA’s financial assistance
in some cases. During the first 5-year
review of size standards, some
commenters had expressed concerns
about the SBA’s policy of not lowering
size standards based on the analytical
results.
As part of option one, SBA also
considered increasing 46 size standards
as suggested by the analytical results
and mitigating the impact of the
decreases to size standards by adjusting
the calculated sizes considering the
impact on small business access to
Federal contracting and loans. However,
in the present situation with the global
COVID–19 pandemic resulting in high
levels of risk and dramatic reductions in
economic activity of unprecedented
nature, SBA presents the impacts of
adopting the analytical results without
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jbell on DSKJLSW7X2PROD with PROPOSALS
adjustment in Alternative Option One
and proposes to retain all size standards
for which the evaluation of principal
factors suggested reductions, and to
adopt only the increases suggested by
the evaluation. SBA will adopt this
approach temporarily and may
reevaluate this approach as the
economic situation evolves.
Under option two, given the current
COVID–19 pandemic, SBA considered
retaining the current level of all size
standards even though the current
analysis may suggest changing them.
SBA considers that the option of
retaining all size standards at this
moment provides the opportunity to
reassess the economic situation once the
economic recovery starts. Under this
option, as the current situation
develops, SBA will be able to assess
new data available on economic
indicators, federal procurement, and
SBA loans before adopting changes to
size standards. However, SBA is not
adopting option two because the
Regulatory Impact Analysis shows that
retaining all size standards at their
current levels is more onerous for the
small businesses than the option of
adopting 46 increases and retaining 48
size standards. SBA may reevaluate this
approach as the current economic
situation evolves.
Request for Comments
SBA invites public comments on this
proposed rule, especially on the
following issues:
1. SBA seeks feedback on whether
SBA’s proposal to increase 46 size
standards and retain 48 size standards is
appropriate given the results from the
latest available industry and Federal
contracting data of each industry and
subindustry (exception) reviewed in this
proposed rule, along with ongoing
uncertainty and dramatic contraction in
economic activity due to the global
COVID–19 pandemic. SBA also seeks
suggestions, along with supporting facts
and analysis, for alternative standards, if
they would be more appropriate than
the proposed size standards.
2. SBA also seeks comments on
whether SBA should not lower any size
standards in view of the COVID–19
pandemic and its adverse impacts on
small businesses as well as on the
overall economic situation when
analytical results suggest some size
standards could be lowered. SBA
believes that lowering size standards
under the current economic
environment would run counter to what
Congress and the Federal Government
are doing to aid and provide relief to the
nation’s small businesses impacted by
the COVID–19 pandemic.
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3. Given the uncertainty produced by
the global COVID–19 pandemic and the
economic consequences, SBA would
like to receive comments from the
public on the possibility of lowering
size standards while mitigating the
consequences of the lower standards,
instead of not lowering any size
standards at all.
4. In calculating the overall industry
size standard, SBA has assigned equal
weight to each of the five primary
factors in all industries and
subindustries covered by this proposed
rule. SBA seeks feedback on whether it
should assign equal weight to each
factor or on whether it should give more
weight to one or more factors for certain
industries or subindustries.
Recommendations to weigh some
factors differently than others should
include suggested weights for each
factor along with supporting facts and
analysis.
5. Finally, SBA seeks comments on
data sources it used to examine industry
and Federal market conditions, as well
as suggestions on relevant alternative
data sources that the Agency should
evaluate in reviewing or modifying size
standards for industries covered by this
proposed rule.
Public comments on the above issues
are very valuable to SBA for validating
its proposed size standards revisions in
this proposed rule. Commenters
addressing size standards for a specific
industry or a group of industries should
include relevant data and/or other
information supporting their comments.
If comments relate to the application of
size standards for Federal procurement
programs, SBA suggests that
commenters provide information on the
size of contracts in their industries, the
size of businesses that can undertake the
contracts, start-up costs, equipment and
other asset requirements, the amount of
subcontracting, other direct and indirect
costs associated with the contracts, the
use of mandatory sources of supply for
products and services, and the degree to
which contractors can mark up those
costs.
Compliance With Executive Orders
12866 and 13771, the Regulatory
Flexibility Act (5 U.S.C. 601–612),
Executive Orders 13563, 12988, and
13132, and the Paperwork Reduction
Act (44 U.S.C. Ch. 35)
Executive Order 12866
The Office of Management and Budget
(OMB) has determined that this
proposed rule is a significant regulatory
action for purposes of Executive Order
12866. Accordingly, in the next section
SBA provides a Regulatory Impact
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72597
Analysis of this proposed rule,
including (1) a statement of the need for
the proposed action, (2) an examination
of alternative approaches, and (3) an
evaluation of the benefits and costs—
both quantitative and qualitative—of the
proposed action and the alternatives
considered. However, this proposed rule
is not a ‘‘major rule’’ under the
Congressional Review Act, 5 U.S.C. 800.
Regulatory Impact Analysis
1. What is the need for this regulatory
action?
Under the Small Business Act (Act)
(15 U.S.C. 632(a)), SBA’s Administrator
is responsible for establishing small
business size definitions (or ‘‘size
standards’’) and ensuring that such
definitions vary from industry to
industry to reflect differences among
various industries. The Jobs Act requires
SBA to review every 5 years all size
standards and make necessary
adjustments to reflect current industry
and Federal market conditions. This
proposed rule is part of the second 5year review of size standards in
accordance with the Jobs Act. The first
5-year review of size standards was
completed in early 2016. Such periodic
reviews of size standards provide SBA
with an opportunity to incorporate
ongoing changes to industry structure
and Federal market environment into
size standards and to evaluate the
impacts of prior revisions to size
standards on small businesses. This also
provides SBA with an opportunity to
seek and incorporate public input to the
size standards review and analysis. SBA
believes that proposed size standards
revisions for industries being reviewed
in this proposed rule will make size
standards more reflective of the current
economic characteristics of businesses
in those industries and the latest trends
in Federal marketplace.
SBA’s mission is to aid and assist
small businesses through a variety of
financial, procurement, business
development and counseling, and
disaster assistance programs. To
determine the actual intended
beneficiaries of these programs, SBA
establishes numerical size standards by
industry to identify businesses that are
deemed small.
The proposed revisions to the existing
size standards for 94 industries or
subindustries in NAICS Sectors 54, 55,
56 are consistent with SBA’s statutory
mandates to help small businesses grow
and create jobs and to review and adjust
size standards every five years. This
regulatory action promotes the
Administration’s goals and objectives as
well as meets the SBA’s statutory
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responsibility. One of SBA’s goals in
support of promoting the
Administration’s objectives is to help
small businesses succeed through fair
and equitable access to capital and
credit, Federal Government contracts
and purchases, and management and
technical assistance. Reviewing and
modifying size standards, when
appropriate, ensures that intended
beneficiaries are able to access Federal
small business programs that are
designed to assist them to become
competitive and create jobs.
2. What are the potential benefits and
costs of this regulatory action?
OMB directs agencies to establish an
appropriate baseline to evaluate any
benefits, costs, or transfer impacts of
regulatory actions and alternative
approaches considered. The baseline
should represent the agency’s best
assessment of what the world would
look like absent the regulatory action.
For a new regulatory action
promulgating modifications to an
existing regulation (such as modifying
the existing size standards), a baseline
assuming no change to the regulation
(i.e., making no changes to current size
standards) generally provides an
appropriate benchmark for evaluating
benefits, costs, or transfer impacts of
proposed regulatory changes and their
alternatives.
Proposed Changes to Size Standards
Based on the results from analyses of
latest industry and Federal contracting
data, as well as consideration of the
impact of size standards changes on
small businesses and significant adverse
impacts of the COVID–19 emergency on
small businesses and the overall
economic activity, of the total of 94
industries in Sectors 54, 55, and 56 that
have receipts-based size standards, SBA
proposes to increase size standards for
46 industries and maintain current size
standards for the remaining 48
industries (including exceptions).
The Baseline
For purposes of this regulatory action,
the baseline represents maintaining the
‘‘status quo,’’ i.e., making no changes to
the current size standards. Using the
number of small businesses and levels
of benefits (such as set-aside contracts,
SBA’s loans, disaster assistance, etc.)
they receive under the current size
standards as a baseline, one can
examine the potential benefits, costs
and transfer impacts of proposed
changes to size standards on small
businesses and on the overall economy.
Based on the 2012 Economic Census
(the latest available), of a total of about
1,096,800 businesses in industries in
Sectors 54, 55, and 56, 97.9% are
considered small under the current size
standards. That percentage varies from
65.3 percent% in Sector 55 to 98.4
percent% in Sector 54. Based on the
data from FPDS–NG for fiscal years
2016–2018, about 39,844 unique firms
in those industries received at least one
Federal contract during that period, of
which 82.8 percent% were small under
the current size standards. A total of
$134.1 billion in average annual
contract dollars were awarded to
businesses in those industries during
the period of evaluation, and 32.8% of
the dollars awarded went to small
businesses. For these sectors, providing
contract dollars to small business
through set-asides is quite important.
From the total small business contract
dollars awarded during the period
considered, 71.2% were awarded
through various small business set-aside
programs and 28.8% were awarded
through non-set set-aside contracts.
Based on the SBA’s internal data on its
loan programs for fiscal years 2016–
2018, small businesses in those
industries received, on an annual basis,
a total of 9,664 7(a) and 504 loans in
that period, totaling about $2.9 billion,
of which 86.3% was issued through the
7(a) program and 13.7% was issued
through the 504/CDC program. During
fiscal years 2016–2018, small businesses
in those industries also received 585
loans through the SBA’s Economic
Injury Disaster Loan (EIDL) program,
totaling about $36.2 million on an
annual basis. Table 8, Baseline for All
Industries, below, provides these
baseline results by sector.
TABLE 8—BASELINE FOR ALL INDUSTRIES
Sector 54
Baseline All Industries (current size standards) ..............................................
Total firms (Economic Census) .......................................................................
Total small firms under current size standards (Economic Census) ..............
Small firms as % of total firms .........................................................................
Total contract dollars ($ million) (FPDS–NG FY2016–2018) ..........................
Total small business contract dollars under current standards ($ million)
(FPDS–NG FY2016–2018) ..........................................................................
Small business dollars as % of total dollars (FPDS–NG FY2016–2018) .......
Total No. of unique firms getting contracts (FPDS–NG FY2016–2018) .........
Total No. of unique small firms getting small business contracts (FPDS–NG
FY2016–2018) ..............................................................................................
Small business firms as % of total firms .........................................................
No. of 7(a) and 504/CDC loans (FY 2016–2018) ...........................................
Amount of 7(a) and 504 loans ($ million) (FY 2016–2018) ............................
No. of EIDL loans (FY 2016–2018) .................................................................
Amount of EIDL loans ($ million) (FY 2016–2018) .........................................
jbell on DSKJLSW7X2PROD with PROPOSALS
Increases to Size Standards
As stated above, of 94 receipts-based
size standards in Sectors 54, 55, and 56
that are reviewed in this proposed rule,
based on the results from analyses of
latest industry and Federal market data
as well as impacts of size standards
changes on small businesses, SBA
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Jkt 253001
44
328,522
320,672
97.6
$38,089.1
94
1,096,767
1,073,769
97.9
$134,139.3
$34,208.0
35.6%
26,673
$0.0
0.6%
3
$9,816.8
25.8%
15,709
$44,025.0
32.8%
39,844
21,318
79.9%
6,415
$2,056.8
406
$25.2
1
33.3%
64
$41.9
1
$0.0
13,349
85.0%
3,185
$796.0
178
$11.0
32,996
82.8%
9,664
$2,894.7
585
$36.2
The most significant benefit to
businesses from proposed increases to
size standards is gaining eligibility for
Fmt 4702
Sfmt 4702
Total
2
7,544
4,926
65.3
$0.18
Benefits of Increases to Size Standards
Frm 00015
Sector 56
48
760,701
748,170
98.3
$96,050.0
proposes to increase 46 size standards.
Below are descriptions of the benefits,
costs and transfer impacts of these
proposed increases to size standards.
PO 00000
Sector 55
Federal small business assistance
programs or retaining that eligibility for
a longer period. These include SBA’s
business loan programs, EIDL program,
and Federal procurement programs
intended for small businesses. Federal
procurement programs provide targeted,
set-aside opportunities for small
businesses under SBA’s various
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business development and contracting
programs. These include the 8(a)/BD
(Business Development) Program, the
Small Disadvantaged Businesses (SDB)
Program, the Historically Underutilized
Business Zones (HUBZone) Program,
the Women-Owned Small Businesses
(WOSB) Program, the Economically
Disadvantaged Women-Owned Small
Businesses (EDWOSB) Program, and the
Service-Disabled Veteran-Owned Small
Businesses (SDVOSB) Program.
Besides set-aside contracting and
financial assistance discussed above,
small businesses also benefit through
reduced fees, less paperwork, and fewer
compliance requirements that are
available to small businesses through
the Federal Government. However, SBA
has no data to estimate the number of
small businesses receiving such
benefits.
Based on the 2012 Economic Census
(latest available), SBA estimates that in
46 industries in NAICS Sectors 54, 55,
and 56 for which it has proposed to
increase size standards, about 2,600
firms (see Table 9, below), not small
under the current size standards, will
become small under the proposed size
standards increases and therefore
become eligible for these programs. That
represents about 0.4% of all firms
classified as small under the current
size standards in industries for which
SBA has proposed increasing size
standards. If adopted, proposed size
standards would result in an increase to
the small business share of total receipts
in those industries from 34.7% to
37.0%.
With more businesses qualifying as
small under the proposed increases to
size standards, Federal agencies will
have a larger pool of small businesses
from which to draw for their small
business procurement programs.
Growing small businesses that are close
to exceeding the current size standards
will be able to retain their small
business status for a longer period under
the higher size standards, thereby
enabling them to continue to benefit
from the small business programs.
Based on the FPDS–NG data for fiscal
years 2016–2018, SBA estimates that
about 464 firms that are active in
Federal contracting in those industries
would gain small business status under
the proposed size standards. Based on
the same data, SBA estimates that those
newly-qualified small businesses under
the proposed increases to size
standards, if adopted, could receive
Federal small business contracts totaling
about $752.6 million annually. That
represents a 4.0% increase to small
business dollars from the sector
baseline.
The added competition from more
businesses qualifying as small can result
in lower prices to the Government for
procurements set-aside or reserved for
small businesses, but SBA cannot
quantify this impact. Costs could be
higher when full and open contracts are
awarded to HUBZone businesses that
receive price evaluation preferences.
However, with agencies likely setting
aside more contracts for small
businesses in response to the
availability of a larger pool of small
businesses under the proposed increases
to size standards, HUBZone firms might
actually end up getting more set-aside
contracts and fewer full and open
contracts, thereby resulting in some cost
savings to agencies. While SBA cannot
estimate such costs savings as it is
impossible to determine the number and
value of unrestricted contracts to be
otherwise awarded to HUBZone firms
will be awarded as set-asides, such cost
savings are likely to be relatively small
as only a small fraction of full and open
contracts are awarded to HUBZone
businesses.
Under SBA’s 7(a) and 504 loan
programs, based on the data for fiscal
years 2016–2018, SBA estimates up to
about 26 SBA 7(a) and 504 loans
totaling about $10.6 million could be
made to these newly-qualified small
businesses in those industries under the
proposed size standards. That
represents a 0.4% increase to the loan
amount compared to the Group
baseline.
Newly-qualified small businesses will
also benefit from the SBA’s EIDL
program. Since the benefit provided
through this program is contingent on
the occurrence and severity of a disaster
in the future, SBA cannot make a
meaningful estimate of this impact.
However, based on the historical trends
of the EIDL data, SBA estimates that, on
an annual basis, the newly-defined
small businesses under the proposed
increases to size standards, if adopted,
could receive three (3) EIDL loans,
totaling about $0.15 million.
Additionally, the newly-defined small
businesses would also benefit through
reduced fees, less paperwork, and fewer
compliance requirements that are
available to small businesses through
the Federal Government, but SBA has
no data to quantify this impact. Table 9,
Impacts of Proposed Increases to Size
Standards, provides these results by
NAICS sector.
TABLE 9—IMPACTS OF PROPOSED INCREASES TO SIZE STANDARDS
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Sector 54
No. of industries with proposed increases to size standards ..........................
Total current small businesses in industries with Proposed increases to size
standards (Economic Census 2012) ............................................................
Additional firms qualifying as small under proposed standards (2012 Economic Census) .............................................................................................
Percentage of additional firms qualifying as small relative to current small
businesses in industries with proposed increases to size standards ..........
No. of current unique small firms getting small business contracts in industries with proposed increases to size standards (FPDS–NG FY2016–
2018) 1 ..........................................................................................................
Additional small business firms getting small business status (FPDS–NG
FY2016–2018) ..............................................................................................
% increase to small businesses relative to current unique small firms getting small business contracts in industries with proposed increases to
size standards (FPDS–NG FY2016–2018) 1 ................................................
Total small business contract dollars under current standards in industries
with proposed increases to size standards ($ million) (FPDS–NG
FY2016–2018) ..............................................................................................
Estimated small business dollars available to newly-qualified small firms
(Using avg dollars obligated to SBs) ($ million) FPDS–NG FY 2016–
2018) 2 ..........................................................................................................
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Frm 00016
Fmt 4702
Sfmt 4702
Sector 55
Sector 56
Total
27
2
17
46
462,890
4,926
176,504
644,321
1,345
527
710
2,582
0.3%
10.7%
0.4%
0.4%
13,151
1
4,180
16,732
412
0
99
464
3.1%
0%
2.4%
2.8%
16,182.3
0.0
2,851.0
19,033.0
651.4
0.0
101.2
752.6
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TABLE 9—IMPACTS OF PROPOSED INCREASES TO SIZE STANDARDS—Continued
Sector 54
% increase to small business dollars relative to total small business contract dollars under current standards in industries with proposed increases to size standards ............................................................................
Total no. of 7(a) and 504 loans to small business in industries with proposed increases to size standards (FY 2016–2018) ...................................
Total amount of 7(a) and 504 loans to small businesses in industries with
proposed increases to size standards ($ million) (FY 2016–2018) .............
Estimated no. of 7(a) and 504 loans to newly-qualified small firms ...............
Estimated 7(a) and 504 loan amount to newly-qualified small firms ($ million) ...............................................................................................................
% increase to 7(a) and 504 loan amount relative to the total amount of 7(a)
and 504 loans in industries with proposed increases to size standards .....
Total no. of EIDL loans to small businesses in industries with proposed increases to size standards (FY 2016–2018) .................................................
Total amount of EIDL loans to small businesses in industries with proposed
increases to size standards ($ million) (FY 2016–2018) .............................
Estimated no. of EIDL loans to newly-qualified small firms ............................
Estimated EIDL loan amount to newly-qualified small firms ($ million) ..........
% increase to EIDL loan amount relative to the total amount of EIDL loans
in industries with proposed increases to size standards .............................
Sector 55
Sector 56
Total
4.0%
0.0
3.5%
4.0%
3,795
64
1,680
5,539
$1,402.3
12
$41.9
7
$390.7
7
$1,834.9
26
$4.4
$4.6
$1.6
$10.6
0.2%
10.9%
0.4%
0.6%
247
1
92
340
$17.0
1
$0.07
$0.0
1
$0.02
$5.3
1
$0.06
$22.3
3
0.15
0.4%
100.0%
1.1%
0.7%
1 Total
impact represents total unique number of firms impacted to avoid double counting as some firms are participating in more than one industry.
2 Additional dollars are calculated multiplying average small business dollars obligated per DUNS times change in number of firms. Numbers of
firms are calculated using the SBA current size standard, not the contracting officer’s size designation.
jbell on DSKJLSW7X2PROD with PROPOSALS
Costs of Increases to Size Standards
Besides having to register in SAM to
be able to participate in Federal
contracting and update the SAM profile
annually, small businesses incur no
direct costs to gain or retain their small
business status as a result of increases
to size standards. All businesses willing
to do business with the Federal
Government must register in SAM and
update their SAM profiles annually,
regardless of their size status. SBA
believes that a vast majority of
businesses that are willing to participate
in Federal contracting are already
registered in SAM and update their
SAM profiles annually. More
importantly, this proposed rule does not
establish the new size standards for the
very first time; rather it intends to
modify the existing size standards in
accordance with a statutory requirement
and the latest data and other relevant
factors.
To the extent that the newly-qualified
small businesses could become active in
Federal procurement, the proposed
increases to size standards, if adopted,
may entail some additional
administrative costs to the Government
as a result of more businesses qualifying
as small for Federal small business
programs. For example, there will be
more firms seeking SBA’s loans, more
firms eligible for enrollment in the
Dynamic Small Business Search (DSBS)
database or in certify.sba.gov, more
firms seeking certification as 8(a)/BD or
HUBZone firms or qualifying for small
business, SDB, WOSB, EDWOSB, and
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SDVOSB status, and more firms
applying for SBA’s 8(a)/BD and all small
business mentor-prote´ge´ programs. With
an expanded pool of small businesses,
it is likely that Federal agencies would
set-aside more contracts for small
businesses under the proposed increases
to size standards. One may surmise that
this might result in a higher number of
small business size protests and
additional processing costs to agencies.
However, the SBA’s historical data on
size protests shows that the number of
size protests decreased following the
increases to receipts-based size
standards as part of the first 5-year
review of size standards. Specifically,
on an annual basis, the number of size
protests fell from about 600 during fiscal
years 2011–2013 (review of most
receipts-based size standards was
completed by the end of FY 2013), as
compared to about 500 during fiscal
years 2014–2016 when size standards
increases were in effect. That represents
a 17% decline. Among those newlydefined small businesses seeking SBA’s
loans, there could be some additional
costs associated with verification of
their small business status. However,
small business lenders have an option of
using the tangible net worth and net
income-based alternative size standard
instead of using the industry-based size
standards to establish eligibility for
SBA’s loans. For these reasons, SBA
believes that these added administrative
costs will be minor because necessary
mechanisms are already in place to
handle these added requirements.
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Fmt 4702
Sfmt 4702
Additionally, some Federal contracts
may possibly have higher costs. With a
greater number of businesses defined as
small due to the proposed increases to
size standards, Federal agencies may
choose to set-aside more contracts for
competition among small businesses
only instead of using a full and open
competition. The movement of contracts
from unrestricted competition to small
business set-aside contracts might result
in competition among fewer total
bidders, although there will be more
small businesses eligible to submit
offers under the proposed size
standards. However, the additional costs
associated with fewer bidders are
expected to be minor since, by law,
procurements may be set-aside for small
businesses under the 8(a)/BD, SDB,
HUBZone, WOSB, EDWOSB, or
SDVOSB programs only if awards are
expected to be made at fair and
reasonable prices.
Costs may also be higher when full
and open contracts are awarded to
HUBZone businesses that receive price
evaluation preferences. However, with
agencies likely setting aside more
contracts for small businesses in
response to the availability of a larger
pool of small businesses under the
proposed increases to size standards,
HUBZone firms might actually end up
getting fewer full and open contracts,
thereby resulting in some cost savings to
agencies. However, such cost savings
are likely to be minimal as only a small
fraction of unrestricted contracts are
awarded to HUBZone businesses.
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jbell on DSKJLSW7X2PROD with PROPOSALS
Transfer Impacts of Increases to Size
Standards
The proposed increases to size
standards, if adopted, may result in
some redistribution of Federal contracts
between the newly-qualified small
businesses and large businesses and
between the newly-qualified small
businesses and small businesses under
the current standards. However, it
would have no impact on the overall
economic activity since total Federal
contract dollars available for businesses
to compete for will not change with
changes to size standards. While SBA
cannot quantify with certainty the
actual outcome of the gains and losses
from the redistribution contracts among
different groups of businesses, it can
identify several probable impacts in
qualitative terms. With the availability
of a larger pool of small businesses
under the proposed increases to size
standards, some unrestricted Federal
contracts that would otherwise be
awarded to large businesses may be setaside for small businesses. As a result,
large businesses may lose some Federal
contracting opportunities. Similarly,
some small businesses under the current
size standards may obtain fewer setaside contracts due to the increased
competition from larger businesses
qualifying as small under the proposed
increases to size standards. This impact
may be offset by a greater number of
procurements being set-aside for all
small businesses. With larger businesses
qualifying as small under the higher size
standards, smaller small businesses
could face some disadvantage in
competing for set-aside contracts against
their larger counterparts. However, SBA
cannot quantify these impacts.
3. What alternatives have been
considered?
Under OMB Circular A–4, SBA is
required to consider regulatory
alternatives to the proposed changes in
the proposed rule. In this section, SBA
describes and analyzes two such
alternatives to the proposed rule.
Alternative Option One to the proposed
rule, a more stringent alternative to the
proposed rule, would propose adopting
size standards based solely on the
analytical results. In other words, the
size standards of 46 industries for which
the analytical results suggest raising size
standards would be raised. However,
the size standards of 42 industries or
subindustries for which the analytical
results suggest lowering size standards
would be lowered. For the 6 remaining
industries or subindustries, size
standards would be maintained at their
current levels. Alternative Option Two
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Jkt 253001
would propose retaining all size
standards for all industries, given the
uncertainty generated by the ongoing
COVID–19 pandemic. Below, SBA
discusses and presents the net impacts
of each option.
Alternative Option One: Consider
Adopting All Calculated Size Standards
As discussed at the beginning of this
section in this proposed rule,
Alternative Option One would cause a
substantial number of currently small
businesses to lose their small business
status and hence to lose their access to
Federal small business assistance,
especially small business set-aside
contracts and SBA’s financial assistance
in some cases. These consequences
could be mitigated. For example, in
response to the 2008 Financial Crisis
and economic conditions that followed,
SBA adopted a general policy in the first
5-year comprehensive size standards
review to not lower any size standard
(except to exclude one or more
dominant firms) even when the
analytical results suggested the size
standard should be lowered. Currently,
because of the economic challenges
presented by the COVID–19 pandemic
and the measures taken to protect public
health, SBA has decided to propose the
same general policy of not lowering size
standards in the ongoing second 5-year
comprehensive size standards review as
well.
The primary benefit of adopting this
alternative is that SBA’s procurement,
management, technical and financial
assistance resources would be targeted
to the most appropriate beneficiaries of
such programs according to the
analytical results. Adopting the size
standards suggested by the analytical
results would also promote consistency
with analytical results in SBA’s exercise
of its authority to determine size
standards. SBA seeks public comment
on the impact of adopting the size
standard as suggested by the analytical
results.
As explained in the Size Standards
Methodology White Paper, in addition
to adopting all results of the primary
analysis, SBA evaluates other relevant
factors as needed such as the impact of
the reductions or increases of size
standards on the distribution of
contracts awarded to small businesses,
and may adopt different results with the
intention of mitigating potential
negative impacts.
We have discussed already the
benefits and costs of increasing 46 size
standards. Below we discuss the
benefits and costs of decreasing 42 size
standards.
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72601
Benefits of Decreases to Size Standards
The most significant benefit to
businesses from decreases to size
standards when SBA’s analysis suggests
such decreases is to ensure that size
standards are more reflective of latest
industry structure and Federal market
trends and that Federal small business
assistance is more effectively targeted to
its intended beneficiaries. These include
SBA’s loan programs, EIDL program,
and Federal procurement programs
intended for small businesses. Federal
procurement programs provide targeted,
set-aside opportunities for small
businesses under SBA’s business
development programs, such as small
business, 8(a)/BD, HUBZone, WOSB,
EDWOSB, and SDVOSB programs. The
adoption of smaller size standards when
the results support them diminishes the
risk of awarding contracts to firms that
are not small anymore.
Decreasing size standards may reduce
the administrative costs of the
Government, because the risk of
awarding contracts to other than small
businesses may diminish when the size
standards reflect better the structure of
the market. The risks of providing SBA’s
loans to firms that are not needing them
the most, or allowing firms that are not
eligible for small business set-asides or
to participate on the SBA procurement
programs will provide for a better
chance for smaller firms to grow and
benefit from the opportunities available
on the Federal market, and strengthen
the small business industrial base for
the Federal Government.
Costs of Decreases to Size Standards
With fewer businesses qualifying as
small under the decreases to size
standards, Federal agencies will have a
smaller pool of small businesses from
which to draw for their small business
procurement programs. For example, in
Option One, during fiscal years 2016–
2018, agencies awarded, on an annual
basis, about $24,762 million in small
business contracts in those 42 industries
for which this Option considered
decreasing size standards. Table 10,
Impacts of Decreases to Size Standards
Under Alternative Option Option One,
below shows that lowering size
standards in 42 industries and
subindustries would reduce Federal
contract dollars awarded to small
businesses by $1,027 million or about
4.1 percent % relative to the baseline
level. Because of the importance of
these sectors for the Federal
procurement, SBA may adopt mitigating
measures to reduce the negative impact
under the assumptions of Option One.
SBA could adopt one or more of the
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following three actions: 1. To accept
decreases in size standards as suggested
by the analytical results, 2. to decrease
size standards by a smaller amount than
the calculated threshold, and 3. to retain
the size standards at their current levels.
Nevertheless, since Federal agencies
are still required to meet the statutory
small business contracting goal of 23
percent %, actual impacts on the overall
set-aside activity is likely to be smaller
as agencies are likely to award more setaside contracts to small businesses that
continue to remain small under the
reduced size standards.
With fewer businesses qualifying as
small, the decreased competition can
also result in higher prices to the
Government for procurements set-aside
or reserved for small businesses, but
SBA cannot quantify this impact.
However, SBA estimates an almost null
impact or non-significant reduction in
dollars obligated to small businesses, if
mitigation measures are adopted.
Decreases to size standards would have
a very minor impact on small businesses
applying for SBA’s 7(a) and 504 loans
because a vast majority of such loans are
issued to businesses that are far below
the reduced size standards. For
example, based on the loan data for
fiscal years 2016–2018, SBA estimates
that about 11 of SBA’s 7(a) and 504
loans with total amounts of $2.8 million
could not be made to those small
businesses that would lose eligibility
under the reduced size standards (before
mitigation). That represents about 0.3%
decrease of the loan amounts compared
to the baseline. Table 10, below, shows
these results by sector. However, the
actual impact could be much less as
businesses losing small business
eligibility under the decreases to
industry-based size standards could still
qualify for SBA’s loans under the
tangible net worth and net incomebased alternative size standard.
Businesses losing small business
status would also be impacted in terms
of access to loans through the SBA’s
EIDL program. However, SBA expects
such impact to be minimal as only a
small number of businesses in those
industries received such loans during
fiscal years 2016–2018. Additionally, all
those businesses were below the
reduced size standards. 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.
Small businesses becoming other than
small if size standards were decreased
might lose benefits through reduced
fees, less paperwork, and fewer
compliance requirements that are
available to small businesses through
the Federal Government, but SBA has
no data to quantify this impact.
However, if agencies determine that
SBA’s size standards do not adequately
serve such purposes, they can establish
a different size standard with an
approval from SBA if they are required
to use SBA’s size standards for their
programs.
TABLE 10—IMPACTS OF DECREASES TO SIZE STANDARDS UNDER ALTERNATIVE OPTION ONE
jbell on DSKJLSW7X2PROD with PROPOSALS
Sector 54
No. of industries for which SBA considered decreasing size standards
(2012 Economic Census) .............................................................................
Total current small businesses in industries for which SBA considered decreasing size standards (EC 2012) ..............................................................
Estimated no. of firms losing small status for which SBA considered decreasing size standards (2012 Economic Census) .....................................
% of Firms losing small status relative to current small businesses in industries for which SBA considered decreasing size standards ........................
No. of current unique small firms getting small business contracts in industries for which SBA considered decreasing size standards (FPDS–NG FY
2016–2018) 1 ................................................................................................
Estimated number of small business firms that would have lost small business status in the decreases that SBA considered .....................................
% decrease to small business firms relative to current unique small firms
getting small business contracts in industries for which SBA considered
decreasing size standards (FPDS–NG FY 2016–2018) 1 ............................
Total small business contract dollars under current size standards in industries for which SBA considered decreasing size standards ($ million)
(FPDS–NG FY 2016–2018) .........................................................................
Estimated small business dollars not available to firms losing small business status (Using avg dollars obligated to SBs) ($ million) 2 (FPDS–
NG FY 2016–2018) ......................................................................................
% decrease to small business dollars relative to total small business contract dollars under current size standards in industries for which SBA considered decreasing size standards ..............................................................
Total no. of 7(a) and 504 loans to small businesses in industries for which
SBA considered decreasing size standards (FY 2016–2018) .....................
Total amount of 7(a) and 504 loans to small businesses in industries for
which SBA considered decreasing size standards ($ million) (FY 2016–
2018) ............................................................................................................
Estimated no. of 7(a) and 504 loans not available to firms that would have
lost small business status ............................................................................
Estimated 7(a) and 504 loan amount not available to firms that would have
lost small status ($ million) ...........................................................................
% decrease to 7(a) and 504 loan amount relative to the total amount of 7(a)
and 504 loans in industries for which SBA considered decreasing size
standards ......................................................................................................
Total no. of EIDL loans to small businesses in industries for which SBA
considered decreasing size standards (FY 2016–2018) .............................
Total amount of EIDL loans to small businesses in industries for which SBA
considered decreasing size standards ($ million) (FY 2016–2018) ............
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Sector 55
Sector 56
Total
18
0
24
42
276,751
0
125,106
401,857
676
0
375
1,051
0.2%
0
0.3%
0.3%
10,016
0
8,885
18,280
291
0
145
397
2.9%
0
1.6%
2.2%
$17,914.2
0
$6,847.8
$24,762.0
$824.7
0
$201.8
$1,026.6
4.6%
0
2.9%
4.1%
2,519
0
1,230
3,749
$617.4
0
$335.2
$952.6
¥7
0
¥4
¥11
¥$1.7
........................
¥$1.1
¥$2.8
¥0.3%
0
¥0.3%
¥0.3%
151
0
71
222
$7.4
0
$4.8
$12.3
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TABLE 10—IMPACTS OF DECREASES TO SIZE STANDARDS UNDER ALTERNATIVE OPTION ONE—Continued
Sector 54
Estimated no. of EIDL loans not available to firms that would have lost
small business status ...................................................................................
Estimated EIDL loan amount not available to firms that would have lost
small business status ($ million) ..................................................................
% decrease to EIDL loan amount relative to the baseline ..............................
Sector 55
Sector 56
Total
¥1
0
¥1
¥2
¥$0.05
¥0.7%
0
0
¥$0.07
¥1.4%
¥$0.12
¥1.0%
1 Total impact represents total unique industries impacted to avoid double counting as some industries have large firms gaining small business
status and small firms extending small business status.
2 Additional dollars are calculated multiplying average small business dollars obligated per DUNS times change in number of firms.
Transfer Impacts of Decreases to Size
Standards
If the size standards were decreased
under Alternative Option One, it may
result in a redistribution of Federal
contracts between small businesses
losing their small business status and
large businesses and between small
businesses losing their small business
status and small businesses remaining
small under the reduced size standards.
However, as under the proposed
increases to size standards, it would
have no impact on the overall economic
activity since the total Federal contract
dollars available for businesses to
compete for will stay the same. While
SBA cannot estimate with certainty the
actual outcome of the gains and losses
among different groups of businesses
from contract redistribution resulting
from decreases to size standards, it can
identify several probable impacts. With
a smaller pool of small businesses under
the decreases to size standards, some
set-aside Federal contracts to be
otherwise awarded to small businesses
may be competed on an unrestricted
basis. As a result, large businesses may
have more Federal contracting
opportunities. However, because
agencies are still required by law to
award 23% of dollars to small
businesses, SBA expects the movement
of set-aside contracts to unrestricted
competition to be limited. For the same
reason, small businesses remaining
small under the reduced size standards
are likely to obtain more set-aside
contracts due to the reduced
competition from fewer businesses
qualifying as small under the decreases
to size standards. With some larger
small businesses losing small business
status under the decreases to size
standards, smaller small businesses
would likely become more competitive
in obtaining set-aside contracts.
However, SBA cannot quantify these
impacts.
Net Impact of Alternative Option One
To estimate the net impacts of
Alternative Option One, SBA followed
the same methodology used to evaluate
the impacts of the proposed size
standards (see Table 9 above). However,
under Alternative Option One, SBA
used the calculated size standards
instead of the proposed ones to
determine the impacts of changes to
current thresholds. The impact of the
increases of size standards were already
shown in Table 9 above. Table 10
(above) and Table 11, Net Impacts of
Size Standards Changes under
Alternative Option One, below, present
the impact of the decreases of size
standards and the net impact of
adopting the calculated results under
Alternative Option One, respectively.
Based on the 2012 Economic Census,
SBA estimates that in 88 industries in
NAICS Sectors 54, 55, and 56 for which
the analytical results suggested to
change size standards, about 1,530 firms
(see Table 11, below), would become
small under the Option One. That
represents about 0.1% of all firms
classified as small under the current
size standards.
Based on the FPDS–NG data for fiscal
years 2016–2018, SBA estimates that
about 67 active firms in Federal
contracting in those industries would
lose small business status under
Alternative Option One, most of them
from Sector 56. This represents a
decrease of about 0.2% of the total
number of small businesses
participating in Federal contracting
under the current size standards. Based
on the same data, SBA estimates that
about $274.0 million of Federal
procurement dollars would not be
available to firms losing their small
status. This represents a decrease of
0.6% from the Group’s baseline. A large
amount of the losses are accounted for
by Sector 54.
Based on the SBA’s loan data for
fiscal years 2016–2018, the total number
of 7(a) and 504 loans may increase by
about 15 loans, and the loan amounts by
about $7.8 million. This represents a
0.3% increase of the loan amounts
relative to the Group baseline.
Firms’ participation under the SBA’s
EIDL program will be affected as well.
Since the benefit provided through this
program is contingent on the occurrence
and severity of a disaster in the future,
SBA cannot make a meaningful estimate
of this impact. However, based on the
historical trends of the EIDL data, SBA
estimates that the total number of EIDL
loans may increase by about 1 loan, and
the loan amount by about $.03 million.
This represents a 0.1% increase of the
loan amounts relative to the Group
baseline. Table 11, below, provides
these results by NAICS sector.
TABLE 11—NET IMPACTS OF SIZE STANDARDS CHANGES UNDER ALTERNATIVE OPTION ONE
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Sector 54
No. of industries with proposed changes to size standards ...........................
Total no. of small business under the current size standards (2012 Economic Census) .............................................................................................
Additional firms qualifying as small under proposed size standards (2012
Economic Census) .......................................................................................
% of additional firms qualifying as small relative to total current small businesses ..........................................................................................................
No. of current unique small firms getting small business contracts (FPDS–
NG FY 2016–2018) 1 ....................................................................................
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Sector 55
Sector 56
Total
45
2
41
88
739,641
4,926
301,609
1,046,177
670
527
334
1,531
0.1%
10.7%
0.1%
0.1%
20,601
1
12,384
31,395
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TABLE 11—NET IMPACTS OF SIZE STANDARDS CHANGES UNDER ALTERNATIVE OPTION ONE—Continued
Sector 54
Additional small firms getting small business status (FPDS–NG FY 2016–
2018) ............................................................................................................
% increase to small firms relative to current unique small firms getting small
business contracts (FPDS–NG FY 2016–2018) 1 ........................................
Total small business small business contract dollars under current size
standards ($ million) (FPDS–NG FY 2016–2018) .......................................
Estimated small business dollars available to newly-qualified small firms ($
million) FPDS–NG FY 2016–2018) 2 ............................................................
% increase to dollars relative to total small business contract dollars under
current size standards ..................................................................................
Total no. of 7(a) and 504 loans to small businesses (FY 2016–2018) ...........
Total amount of 7(a) and 504 loans to small businesses (FY 2016–2018) ....
Estimated no. of additional 7(a) and 504 loans to newly-qualified small firms
Estimated additional 7(a) and 504 loan amount to newly-qualified small
firms ($ million) .............................................................................................
% increase to 7(a) and 504 loan amount relative to the total amount of 7(a)
and 504 loans to small businesses .............................................................
Total no. of EIDL loans to small businesses (FY 2016–2018) .......................
Total amount of EIDL loans to small businesses (FY 2016–2018) ................
Estimated no. of additional EIDL loans to newly-qualified small firms ...........
Estimated additional EIDL loan amount to newly-qualified small firms ($ million) ...............................................................................................................
% increase to EIDL loan amount relative to the total amount of EIDL loans
to small businesses ......................................................................................
Sector 55
Sector 56
Total
48
0
¥75
¥67
0.2%
0.0%
¥0.6%
¥0.2%
34,096.4
0.0
9,700
43,795
¥173.3
0
¥101
¥274.0
¥0.5%
6,415
$2,056.8
5
0.0%
64
$41.9
7
¥1.0%
3,185
$796.0
3
¥0.6%
9,664
$2,894.7
15
$2.7
$4.6
$0.5
$7.8
0.1%
406
$25.2
0
10.9%
1
$0.0
1
0.1%
178
$11.0
0
0.3%
585
$36.2
1
$0.02
$0.02
¥$0.01
$0.03
0.1%
100.0%
¥0.12%
0.1%
1 Total
impact represents total unique industries impacted to avoid double counting as some industries have large firms gaining small business
status and small firms extending small business status.
2 Additional dollars are calculated multiplying average small business dollars obligated per DUNS times change in number of firms.
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Alternative Option Two: To Retain All
Current Size Standards
Under this option, given the current
COVID–19 pandemic, as discussed
elsewhere, SBA considered retaining the
current levels of all size standards even
though the analytical results may
suggest changing them. SBA considers
that the option of retaining all size
standards at this moment provides the
opportunity to reassess the economic
situation once the economic recovery
starts. Under this option, as the current
situation develops, SBA will be able to
assess new data available on economic
indicators, federal procurement, and
SBA loans as well. SBA estimates a net
impact of zero for this option, when
compared to the baseline. However, if
we compare the proposal of increasing
46 size standards and retaining 48 with
this alternative approach, the benefits
for small businesses of adopting the
proposal will not be attained, so SBA is
not proposing the Alternative Option
Two.
Executive Order 13771
SBA has determined, subject to the
approval of the Office of Information
and Regulatory Affairs (OIRA) of the
Office of Management and Budget
(OMB), that this proposed rule is not
subject to the requirements of E.O.
13771 because most of the proposed
rule’s impacts are income transfers
between small and other than small
businesses. According to the E.O. 13771
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guidance in OMB M–17–21, dated April
5, 2017 (‘‘E.O. 13771 Guidance’’),
‘‘transfers’’ are not covered by E.O.
13771. The E.O. 13771 guidance also
states that ‘‘in some cases, [transfer
rules] may impose requirements apart
from transfers, or transfers may distort
markets causing inefficiencies. In those
cases, the actions would need to be
offset to the extent they impose more
than de minimis costs.’’ SBA estimates
that this rulemaking would impose only
de minimis costs on small businesses
and would result in negligible
compliance costs. Thus, SBA has
determined that this rulemaking is
exempt from the requirements of E.O.
13771. Details on the estimated costs of
this proposed rule can be found in the
Regulatory Impact Analysis above.
Initial Regulatory Flexibility Analysis
According to the Regulatory
Flexibility Act (RFA), 5 U.S.C. 601–612,
when an agency issues a rulemaking, it
must prepare a regulatory flexibility
analysis to address the impact of the
rule on small entities.
This proposed rule, if adopted, may
have a significant impact on a
substantial number of small businesses
in the industries covered by this
proposed rule. As described above, this
proposed rule may affect small
businesses seeking Federal contracts,
loans under SBA’s 7(a), 504 and EIDL
Programs, and assistance under other
Federal small business programs.
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Immediately below, SBA sets forth an
initial regulatory flexibility analysis
(IRFA) of this proposed rule addressing
the following questions: (1) What is the
need for and objective of the rule?; (2)
What is SBA’s description and estimate
of the number of small businesses to
which the rule will apply?; (3) What are
the projected reporting, record keeping,
and other compliance requirements of
the rule?; (4) What are the relevant
Federal rules that may duplicate,
overlap, or conflict with the rule?; and
(5) What alternatives will allow the
Agency to accomplish its regulatory
objectives while minimizing the impact
on small businesses?
1. What is 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 the
industries covered by this proposed
rule. Such changes can be enough to
support revisions to current size
standards for some industries. Based on
the analysis of the latest data available,
SBA believes that the revised standards
in this proposed rule more
appropriately reflect the size of
businesses that need Federal assistance.
The 2010 Jobs Act also requires SBA to
review all size standards and make
necessary adjustments to reflect market
conditions.
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2. What is SBA’s description and
estimate of the number of small
businesses to which the rule will apply?
Based on data from the 2012
Economic Census, SBA estimates that
there are about 1.05 million small firms
covered by this rulemaking under
industries with proposed changes to
size standards. If the proposed rule is
adopted in its present form, SBA
estimates that an additional 1,530
businesses will be defined as small.
3. What are the projected reporting,
record keeping and other compliance
requirements of the rule?
The proposed 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 SAM and self-certify that
they are small at least once annually.
Therefore, businesses opting to
participate in those programs must
comply with SAM requirements.
Changes in small business size
standards do not result in additional
costs associated with SAM registration
or certification. Changing size standards
alters the access to SBA’s programs that
assist small businesses but does not
impose a regulatory burden because
they neither regulate nor control
business behavior.
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4. What are the relevant Federal rules
that may duplicate, overlap or conflict
with the rule?
Under section 3(a)(2)(C) of the Small
Business Act, 15 U.S.C. 632(a)(2)(c),
Federal agencies must use SBA’s size
standards to define a small business,
unless specifically authorized by statute
to do otherwise. In 1995, SBA published
in the Federal Register a list of statutory
and regulatory size standards that
identified the application of SBA’s size
standards as well as other size standards
used by Federal agencies (60 FR 57988
(November 24, 1995)). SBA is not aware
of any Federal rule that would duplicate
or conflict with establishing size
standards.
However, the Small Business Act and
SBA’s regulations allow Federal
agencies to develop different size
standards if they believe that SBA’s size
standards are not appropriate for their
programs, with the approval of SBA’s
Administrator (13 CFR 121.903). The
Regulatory Flexibility Act authorizes an
Agency to establish an alternative small
business definition, after consultation
with the Office of Advocacy of the U.S.
Small Business Administration (5 U.S.C.
601(3)).
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5. What alternatives will allow the
Agency to accomplish its regulatory
objectives while minimizing the impact
on small entities?
By law, SBA is required to develop
numerical size standards for
establishing eligibility for Federal small
business assistance programs. Other
than varying size standards by industry
and changing the size measures, no
practical alternative exists to the
systems of numerical size standards.
However, SBA considered two
alternatives to its proposal to increase
46 size standards and maintain 48 size
standards at their current levels. The
first alternative SBA considered was
adopting size standards based solely on
the analytical results. In other words,
the size standards of 46 industries for
which the analytical results suggest
raising size standards would be raised.
However, the size standards of 42
industries for which the analytical
results suggest lowering size standards
would be lowered. This would cause a
significant number of small businesses
to lose their small business status,
particularly in sectors 54 and 56 (please
see table 10). Under the second
alternative, in view of the COVID–19
pandemic, SBA considered retaining all
size standards at the current levels, even
though the analytical results may
suggest increasing 46 size standards and
decreasing 42. Retaining all size
standards at their current levels would
be more onerous for small businesses
than the option of adopting 46 increases
and retaining the rest of the size
standards.
Executive Order 13563
Executive Order 13563 emphasizes
the importance of quantifying both costs
and benefits, reducing costs,
harmonizing rules, and promoting
flexibility. A description of the need for
this regulatory action and benefits and
costs associated with this action,
including possible distributional
impacts that relate to Executive Order
13563, is included above in the
Regulatory Impact Analysis under
Executive Order 12866. Additionally,
Executive Order 13563, section 6, calls
for retrospective analyses of existing
rules.
The review of size standards in the
industries covered by this proposed rule
is consistent with section 6 of Executive
Order 13563 and the 2010 Jobs Act,
which requires SBA to review all size
standards and make necessary
adjustments to reflect market
conditions. Specifically, the 2010 Jobs
Act requires SBA to review at least onethird of all size standards during every
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72605
18-month period from the date of its
enactment (September 27, 2010) and to
review all size standards not less
frequently than once every 5 years,
thereafter. SBA had already launched a
comprehensive review of size standards
in 2007. In accordance with the Jobs
Act, SBA completed the comprehensive
review of the small business size
standard for each industry, except those
for agricultural enterprises previously
set by Congress, and made appropriate
adjustments to size standards for a
number of industries to reflect current
Federal and industry market conditions.
The first comprehensive review was
completed in 2015. Prior to 2007, the
last time SBA conducted a
comprehensive review of all size
standards was during the late 1970s and
early 1980s.
SBA issued a White Paper entitled
‘‘Size Standards Methodology’’ and
published a notice in the April 11, 2019,
edition of the Federal Register (84 FR
14587) to advise the public that the
document is available for public review
and comments. The ‘‘Size Standards
Methodology’’ White Paper explains
how SBA establishes, reviews, and
modifies its receipts-based and
employee-based small business size
standards. SBA gave appropriate
consideration to all input, suggestions,
recommendations, and relevant
information obtained from industry
groups, individual businesses, and
Federal agencies in developing size
standards for those industries covered
by this proposed rule.
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
proposed rule will not have substantial,
direct effects on the States, on the
relationship between the National
Government and the States, or on the
distribution of power and
responsibilities among the various
levels of government. Therefore, SBA
has determined that this proposed rule
has no federalism implications
warranting preparation of a federalism
assessment.
Paperwork Reduction Act
For the purpose of the Paperwork
Reduction Act, 44 U.S.C. Ch. 35, SBA
has determined that this proposed rule
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will not impose any new reporting or
record keeping requirements.
PART 121—SMALL BUSINESS SIZE
REGULATIONS
List of Subjects in 13 CFR Part 121
■
Administrative practice and
procedure, Government procurement,
Government property, Grant programs—
business, Individuals with disabilities,
Loan programs—business, Reporting
and recordkeeping requirements, Small
businesses.
For the reasons set forth in the
preamble, SBA proposes to amend 13
CFR part 121 as follows:
1. The authority citation for part 121
continues to read as follows:
Authority: 15 U.S.C. 632, 634(b)(6),
636(a)(36), 662, and 694a(9); Pub. L. 116–136,
Section 1114.
2. In § 121.201, amend the table by:
a. Revising the heading to Sector 56.
b. Revising entries ‘‘541110,’’
‘‘541191,’’ ‘‘541199,’’ ‘‘541211,’’
‘‘541214,’’ ‘‘541310,’’ ‘‘541330,’’
‘‘541350,’’ ‘‘541360,’’ ‘‘541420,’’
‘‘541490,’’ ‘‘541513,’’ ‘‘541611,’’
‘‘541612,’’ ‘‘541614,’’ ‘‘541720,’’
■
■
■
‘‘541810,’’ ‘‘541830,’’ ‘‘541840,’’
‘‘541850,’’ ‘‘541860,’’ ‘‘541870,’’
‘‘541910,’’ ‘‘541921,’’ ‘‘541930,’’
‘‘541940,’’ ‘‘541990,’’ ‘‘551111,’’
‘‘551112,’’ ‘‘561110,’’ ‘‘561330,’’
‘‘561422,’’ ‘‘561439,’’ ‘‘561440,’’
‘‘561450,’’ ‘‘561499,’’ ‘‘561599,’’
‘‘561612,’’ ‘‘561613,’’ ‘‘561710,’’
‘‘561730,’’ ‘‘561740,’’ ‘‘561910,’’
‘‘561920,’’ ‘‘561990,’’ and ‘‘562998’’ to
read as follows:
§ 121.201 What size standards has SBA
identified by North American Industry
Classification System codes?
*
*
*
*
*
SMALL BUSINESS SIZE STANDARDS BY NAICS INDUSTRY
NAICS codes
*
Size standards
in millions of
dollars
NAICS U.S. industry title
*
*
*
*
*
Size standards
in number of
employees
*
Sector 54—Professional, Scientific and Technical Services
Subsector 541—Professional, Scientific and Technical Services
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541110
541191
541199
541211
................................
................................
................................
................................
Offices of Lawyers ..........................................................................................
Title Abstract and Settlement Offices .............................................................
All Other Legal Services .................................................................................
Offices of Certified Public Accountants ..........................................................
*
*
*
*
*
541214 ................................ Payroll Services ..............................................................................................
*
*
*
*
*
*
541310 ................................ Architectural Services .....................................................................................
*
*
*
*
*
*
541330 ................................ Engineering Services ......................................................................................
*
*
*
*
*
*
541350 ................................ Building Inspection Services ..........................................................................
541360 ................................ Geophysical Surveying and Mapping Services ..............................................
*
*
*
*
*
*
541420 ................................ Industrial Design Services ..............................................................................
*
*
*
*
*
*
541490 ................................ Other Specialized Design Services ................................................................
*
*
*
*
*
*
541513 ................................ Computer Facilities Management Services ....................................................
*
*
*
*
*
*
541611 ................................ Administrative Management and General Management Consulting Services
541612 ................................ Human Resources Consulting Services .........................................................
*
*
*
*
*
*
541614 ................................ Process, Physical Distribution, and Logistics Consulting Services ...............
*
*
*
*
*
*
541720 ................................ Research and Development in the Social Sciences and Humanities ...........
541810 ................................ Advertising Agencies 10 ..................................................................................
*
*
*
*
*
*
................................ Media Buying Agencies ..................................................................................
................................ Media Representatives ...................................................................................
................................ Outdoor Advertising ........................................................................................
................................ Direct Mail Advertising ....................................................................................
................................ Advertising Material Distribution Services ......................................................
*
541830
541840
541850
541860
541870
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$13.5
17.0
18.0
23.5
............................
............................
............................
............................
34.5
*
............................
11.0
*
............................
22.5
*
............................
10.0
25.0
*
............................
............................
15.0
*
............................
12.0
*
............................
32.5
*
............................
21.5
25.5
*
............................
............................
17.5
*
............................
24.5
10 22.5
*
............................
............................
28.5
18.5
30.5
19.5
25.0
*
............................
............................
............................
............................
............................
72607
Federal Register / Vol. 85, No. 220 / Friday, November 13, 2020 / Proposed Rules
SMALL BUSINESS SIZE STANDARDS BY NAICS INDUSTRY—Continued
NAICS codes
Size standards
in millions of
dollars
NAICS U.S. industry title
*
*
*
*
*
541910 ................................ Marketing Research and Public Opinion Polling ............................................
541921 ................................ Photography Studios, Portrait ........................................................................
*
*
*
*
*
*
541930 ................................ Translation and Interpretation Services .........................................................
541940 ................................ Veterinary Services ........................................................................................
541990 ................................ All Other Professional, Scientific and Technical Services .............................
*
Size standards
in number of
employees
20.0
14.0
*
............................
............................
20.0
9.0
17.0
*
............................
............................
............................
34.0
40.0
............................
............................
11.0
............................
36.5
*
............................
22.5
*
............................
23.5
17.0
36.0
*
............................
............................
............................
19.0
*
............................
28.5
*
............................
25.5
38.0
*
............................
............................
15.5
*
............................
8.5
7.5
*
............................
............................
17.0
10 17.5
14.5
*
............................
............................
............................
14.5
*
............................
Sector 55—Management of Companies and Enterprises
Subsector 551—Management of Companies and Enterprises
551111 ................................
551112 ................................
Offices of Bank Holding Companies ..............................................................
Offices of Other Holding Companies .............................................................
Sector 56—Administrative and Support and Waste Management and Remediation Services
Subsector 561—Administrative and Support Services
561110 ................................
Office Administrative Services ........................................................................
*
*
*
*
*
561330 ................................ Professional Employer Organizations ............................................................
*
*
*
*
*
*
561422 ................................ Telemarketing Bureaus and Other Contact Centers ......................................
*
*
*
*
*
*
561439 ................................ Other Business Service Centers (including Copy Shops) .............................
561440 ................................ Collection Agencies ........................................................................................
561450 ................................ Credit Bureaus ................................................................................................
*
*
*
*
*
*
561499 ................................ All Other Business Support Services .............................................................
*
*
*
*
*
*
561599 ................................ All Other Travel Arrangement and Reservation Services ..............................
*
*
*
*
*
*
561612 ................................ Security Guards and Patrol Services .............................................................
561613 ................................ Armored Car Services ....................................................................................
*
*
*
*
*
*
561710 ................................ Exterminating and Pest Control Services ......................................................
*
*
*
*
*
*
561730 ................................ Landscaping Services ....................................................................................
561740 ................................ Carpet and Upholstery Cleaning Services .....................................................
*
*
*
*
*
*
561910 ................................ Packaging and Labeling Services ..................................................................
561920 ................................ Convention and Trade Show Organizers 10 ...................................................
561990 ................................ All Other Support Services .............................................................................
*
Subsector 562—Waste Management and Remediation Services
*
*
*
*
*
562998 ................................ All Other Miscellaneous Waste Management Services .................................
jbell on DSKJLSW7X2PROD with PROPOSALS
*
*
*
*
*
*
*
*
Footnotes
*
*
*
*
*
*
*
10 NAICS codes 488510 (excluding the exception), 531210, 541810, 561510, 561520 and 561920—As measured by total revenues, but excluding funds received in trust for an unaffiliated third party, such as bookings or sales subject to commissions. The commissions received are
included as revenue.
*
*
*
*
*
*
*
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72608
Federal Register / Vol. 85, No. 220 / Friday, November 13, 2020 / Proposed Rules
Jovita Carranza,
Administrator.
[FR Doc. 2020–24903 Filed 11–12–20; 8:45 am]
BILLING CODE 8026–03–P
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 39
[Docket No. FAA–2020–1025; Project
Identifier MCAI–2020–00757–E]
RIN 2120–AA64
Airworthiness Directives; Rolls-Royce
Deutschland Ltd. & Co KG (Type
Certificate Previously Held by BMW
Rolls-Royce GmbH and BMW RollsRoyce Aero Engines) Turbofan
Engines
Federal Aviation
Administration (FAA), DOT.
ACTION: Notice of proposed rulemaking
(NPRM).
AGENCY:
The FAA proposes to adopt a
new airworthiness directive (AD) for
certain Rolls-Royce Deutschland Ltd. &
Co KG (RRD) BR700–715A1–30, BR700–
715B1–30, and BR700–715C1–30 model
turbofan engines. This proposed AD was
prompted by reports of HPT stage 1
blades failing in service due to
sulphidation and subsequent crack
initiation. This proposed AD would
require removal and replacement of the
HPT stage 1 blade and HPT stage 1
blade damper. The FAA is proposing
this AD to address the unsafe condition
on these products.
DATES: The FAA must receive comments
on this proposed AD by December 28,
2020.
ADDRESSES: You may send comments,
using the procedures found in 14 CFR
11.43 and 11.45, by any of the following
methods:
• Federal eRulemaking Portal: Go to
https://www.regulations.gov. Follow the
instructions for submitting comments.
• Fax: (202) 493–2251.
• Mail: U.S. Department of
Transportation, Docket Operations, M–
30, West Building Ground Floor, Room
W12 140, 1200 New Jersey Avenue SE,
Washington, DC 20590.
• Hand Delivery: Deliver to Mail
address above between 9 a.m. and 5
p.m., Monday through Friday, except
Federal holidays.
For service information identified in
this NPRM, contact Rolls-Royce
Deutschland Ltd. & Co KG, Eschenweg
11, 15827 Blankenfelde-Mahlow,
Germany; phone: +49 (0) 33 708 6 0;
website: https://www.rolls-royce.com/
jbell on DSKJLSW7X2PROD with PROPOSALS
SUMMARY:
VerDate Sep<11>2014
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contact-us.aspx. You may view this
service information at the FAA,
Airworthiness Products Section,
Operational Safety Branch, 1200 District
Avenue, Burlington, MA 01803. For
information on the availability of this
material at the FAA, call (781) 238–
7759.
Examining the AD Docket
You may examine the AD docket at
https://www.regulations.gov by
searching for and locating Docket No.
FAA–2020–1025; or in person at Docket
Operations between 9 a.m. and 5 p.m.,
Monday through Friday, except Federal
holidays. The AD docket contains this
NPRM, the mandatory continuing
airworthiness information (MCAI), any
comments received, and other
information. The street address for
Docket Operations is listed above.
FOR FURTHER INFORMATION CONTACT:
Barbara Caufield, Aviation Safety
Engineer, ECO Branch, FAA, 1200
District Avenue, Burlington, MA 01803;
phone: (781) 238–7146; fax: (781) 238–
7199; email: barbara.caufield@faa.gov.
SUPPLEMENTARY INFORMATION:
Comments Invited
The FAA invites you to send any
written relevant data, views, or
arguments about this proposal AD. Send
your comments to an address listed
under ADDRESSES. Include ‘‘Docket No.
FAA–2020–1025; Project Identifier
MCAI–2020–00757–E’’ at the beginning
of your comments. The most helpful
comments reference a specific portion of
the proposal, explain the reason for any
recommended change, and include
supporting data. The FAA will consider
all comments received by the closing
date and may amend this NPRM
because of those comments.
Except for Confidential Business
Information (CBI) as described in the
following paragraph, and other
information as described in 14 CFR
11.35, the FAA will post all comments
received, without change, to https://
www.regulations.gov, including any
personal information you provide. The
agency will also post a report
summarizing each substantive verbal
contact received about this proposal.
Confidential Business Information
CBI is commercial or financial
information that is both customarily and
actually treated as private by its owner.
Under the Freedom of Information Act
(FOIA) (5 U.S.C. 552), CBI is exempt
from public disclosure. If your
comments responsive to this NPRM
contain commercial or financial
information that is customarily treated
as private, that you actually treat as
PO 00000
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Sfmt 4702
private, and that is relevant or
responsive to this NPRM, it is important
that you clearly designate the submitted
comments as CBI. Please mark each
page of your submission containing CBI
as ‘‘PROPIN.’’ The FAA will treat such
marked submissions as confidential
under the FOIA, and they will not be
placed in the public docket of this
NPRM. Submissions containing CBI
should be sent to Barbara Caufield,
Aviation Safety Engineer, ECO Branch,
FAA, 1200 District Avenue, Burlington,
MA 01803. Any commentary that the
FAA receives which is not specifically
designated as CBI will be placed in the
public docket for this rulemaking.
Background
The European Aviation Safety Agency
(EASA), which is the Technical Agent
for the Member States of the European
Community, has issued EASA AD 2018–
0194, dated September 4, 2018 (referred
to after this as ‘‘the MCAI’’), to address
the unsafe condition on these products.
The MCAI states:
Occurrences have been reported on RRD
BR700–715 engines where certain HP turbine
stage 1 blades failed in service. Investigation
of these events showed that these were
caused by sulphidation and subsequent crack
initiation, due to contamination of the blade
shank passing by the blade damper.
This condition, if not corrected, could lead
to further HP turbine stage 1 blade failures,
possibly resulting in engine in-flight shutdown and consequent reduced control of the
aeroplane.
To address this potential unsafe condition,
RRD published the NMSB to provide
instructions to replace the affected assembly.
For the reasons described above, this [EASA]
AD requires determination of the engine
configuration and, depending on findings,
removal of the engine from service to replace
the affected assembly.
You may obtain further information
by examining the MCAI in the AD
docket at https://www.regulations.gov
by searching for and locating Docket No.
FAA–2020–1025.
FAA’s Determination
This product has been approved by
EASA and is approved for operation in
the United States. Pursuant to our
bilateral agreement with the European
Community, EASA has notified us of
the unsafe condition described in the
MCAI. The FAA is issuing this NPRM
because the agency evaluated all the
relevant information provided by EASA
and has determined that the unsafe
condition described previously is likely
to exist or develop in other products of
the same type design.
E:\FR\FM\13NOP1.SGM
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]]>Agencies
[Federal Register Volume 85, Number 220 (Friday, November 13, 2020)]
[Proposed Rules]
[Pages 72584-72608]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-24903]
========================================================================
Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
========================================================================
Federal Register / Vol. 85, No. 220 / Friday, November 13, 2020 /
Proposed Rules
[[Page 72584]]
SMALL BUSINESS ADMINISTRATION
13 CFR Part 121
RIN 3245-AG91
Small Business Size Standards: Professional, Scientific and
Technical Services; Management of Companies and Enterprises;
Administrative and Support and Waste Management and Remediation
Services
AGENCY: U.S. Small Business Administration.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: The U.S. Small Business Administration (SBA) proposes to
increase its receipts-based small business size definitions (commonly
referred to as ``size standards'') for North American Industry
Classification System (NAICS) sectors related to Professional,
Scientific and Technical Services; Management of Companies and
Enterprises; Administrative and Support and Waste Management and
Remediation Services. SBA proposes to increase size standards for 46
industries in those sectors, including 27 industries in NAICS Sector 54
(Professional, Scientific and Technical Services), 2 industries in
Sector 55 (Management of Companies and Enterprises), and 17 industries
in Sector 56 (Administrative and Support and Waste Management and
Remediation Services). SBA's proposed revisions relied on its recently
revised ``Size Standards Methodology'' (Methodology). SBA seeks
comments on its proposed changes to size standards in the above
sectors, and the data sources it evaluated to develop the proposed size
standards.
DATES: SBA must receive comments to this proposed rule on or before
January 12, 2021.
ADDRESSES: Identify your comments by RIN 3245-AG91 and submit them by
one of the following methods: (1) Federal eRulemaking Portal:
www.regulations.gov. Follow the instructions for submitting comments;
or (2) Mail/Hand Delivery/Courier: Khem R. Sharma, Ph.D., Chief, Office
of Size Standards, 409 Third Street SW, Mail Code 6530, Washington, DC
20416.
SBA will post all comments to this proposed rule on
www.regulations.gov. If you wish to submit confidential business
information (CBI) as defined in the User Notice at www.regulations.gov,
you must submit such information to U.S. Small Business Administration,
Khem R. Sharma, Ph.D., Chief, Office of Size Standards, 409 Third
Street SW, Mail Code 6530, Washington, DC 20416, or send an email to
[email protected]. Highlight the information that you consider to
be CBI and explain why you believe SBA should hold this information as
confidential. SBA will review your information and determine whether it
will make the information public.
FOR FURTHER INFORMATION CONTACT: Jorge Laboy-Bruno, Ph.D., Economist,
Office of Size Standards, (202) 205-6618 or [email protected].
SUPPLEMENTARY INFORMATION:
Discussion of Size Standards
To determine eligibility for Federal small business assistance, SBA
establishes small business size definitions (usually referred to as
``size standards'') for private sector industries in the United States.
SBA uses two primary measures of business size for size standards
purposes: Average annual receipts and average number of employees. SBA
uses financial assets for certain financial industries and refining
capacity, in addition to employees, for the petroleum refining industry
to measure business size. In addition, SBA's Small Business Investment
Company (SBIC), Certified Development Company (504), and 7(a) Loan
Programs use either the industry-based size standards or tangible net
worth and net income-based alternative size standards to determine
eligibility for those programs.
In September 2010, Congress passed the Small Business Jobs Act of
2010 (Pub. L. 111-240, 124 Stat. 2504, September 27, 2010) (``Jobs
Act''), requiring SBA to review all size standards every 5 years and
make necessary adjustments to reflect current industry and market
conditions. In accordance with the Jobs Act, in early 2016, SBA
completed the first 5-year review of all size standards--except those
for agricultural enterprises for which size standards were previously
set by Congress--and made appropriate adjustments to size standards for
a number of industries to reflect current industry and Federal market
conditions.
During the previous 5-year comprehensive review, SBA reviewed the
receipts-based size standards for 45 industries and 3 exceptions within
NAICS Sector 54 (Professional, Scientific and Technical Services), 2
industries within Sector 55 (Management of Companies and Enterprises),
and 44 industries in Sector 56 (Administrative and Support and Waste
Management and Remediation Services). These reviews of receipts-based
size standards occurred during October 2010 to December 2013. SBA's
analyses of the relevant industry and Federal contracting data
available at that time supported increasing size standards for 37
industries and maintaining current size standards for 11 industries in
Sector 54 (77 FR 10943, February 10, 2012), increasing size standards
for 2 industries in Sector 55 (78 FR 37409, June 20, 2013), and
increasing size standards in 37 industries and retaining existing size
standards in 7 industries in Sector 56 (77 FR 72291, December 6, 2012).
Table 1, Size Standards Revisions During the First 5-Year Review,
provides a summary of these revisions by NAICS sector.
Table 1--Size Standards Revisions During the First 5-Year Review
----------------------------------------------------------------------------------------------------------------
Number of Number of Number of Number of
Sector Sector name size standards size standards size standards size standards
reviewed increased decreased maintained
----------------------------------------------------------------------------------------------------------------
54........................ Professional, 48 37 0 11
Scientific and
Technical Services.
55........................ Management of 2 2 0 0
Companies and
Enterprises.
[[Page 72585]]
56........................ Administrative and 44 37 0 7
Support and Waste
Management and
Remediation
Services.
---------------------------------------------------------------
Total................. .................... 94 76 0 18
----------------------------------------------------------------------------------------------------------------
Currently, there are 27 different size standards levels covering
1,023 NAICS industries and 14 subindustry activities (commonly known as
``exceptions'' in SBA's table of size standards). 16 of these size
levels are based on average annual receipts, 9 are based on average
number of employees, and 2 are based on other measures.
SBA also adjusts its monetary-based size standards for inflation at
least once every 5 years. An interim final rule on SBA's latest
inflation adjustment to size standards, effective August 19, 2019, was
published in the Federal Register on July 18, 2019 (84 FR 34261). SBA
also updates its size standards every 5 years to adopt the Office of
Management and Budget's (OMB) quinquennial NAICS revisions to its table
of small business size standards. Effective October 1, 2017, SBA
adopted the OMB's 2017 NAICS revisions to its size standards (82 FR
44886, September 27, 2017).
This proposed rule is one of a series of proposed rules that will
review size standards of industries grouped by various NAICS sectors.
Rather than review all size standards at one time, SBA is reviewing
size standards by grouping industries within various NAICS sectors that
use the same size measure (i.e., employees or receipts). In the current
review, SBA will review size standards in six (6) groups of NAICS
sectors. (In the prior review, SBA reviewed size standards mostly on a
sector-by-sector basis.) Once SBA completes its review of size
standards for a group of sectors, it issues for public comments a
proposed rule to revise size standards for those industries based on
the latest available data and other factors deemed relevant by the
SBA's Administrator.
Below is a discussion of SBA's revised ``Size Standards
Methodology'' (Methodology), available at www.sba.gov/size, for
establishing, reviewing, or modifying receipts-based size standards
that SBA has applied to this proposed rule. SBA examines the structural
characteristics of an industry as a basis to assess industry
differences and the overall degree of competitiveness of an industry
and of firms within the industry. Industry structure is typically
examined by analyzing four primary factors: Average firm size, degree
of competition within an industry, start-up costs and entry barriers,
and distribution of firms by size. To assess the ability of small
businesses to compete for Federal contracting opportunities under the
current size standards, as the fifth primary factor, SBA also examines,
for each industry averaging $20 million or more in average annual
Federal contract dollars, the small business share of Federal contract
dollars relative to the small business share of total industry
receipts. When necessary, SBA also considers other secondary factors
that are relevant to the industries and the interests of small
businesses, including impacts of size standards changes on small
businesses.
Size Standards Methodology
SBA has recently revised its Methodology for establishing,
reviewing, or modifying size standards when necessary. See the
notification in the April 11, 2019, edition of the Federal Register (84
FR 14587). The revised Methodology is available on SBA's size standards
web page at www.sba.gov/size. Prior to finalizing the revised
Methodology, SBA issued a notification in the April 27, 2018, edition
of the Federal Register (83 FR 18468) to solicit comments from the
public and notify stakeholders of the proposed changes to the
Methodology. SBA considered all public comments in finalizing the
revised Methodology. For a summary of comments and SBA's responses,
refer to the SBA's April 11, 2019, Federal Register notification cited
above.
The revised Methodology represents a major change from the previous
methodology, which was issued on October 21, 2009 (74 FR 53940).
Specifically, in its revised Methodology, SBA is replacing the
``anchor'' approach applied in the previous methodology with a
``percentile'' approach for evaluating differences in characteristics
among various industries. Under the ``anchor'' approach, SBA generally
evaluated the characteristics of individual industries relative to the
average characteristics of industries with the anchor size standard to
determine whether they should have a higher or a lower size standard
than the anchor. In the ``percentile'' approach, SBA ranks each
industry among all industries with the same measure of size standards
(such as receipts or employees) in terms of four primary industry
factors, discussed in the Industry Analysis subsection below. The
``percentile'' approach is explained more fully in the Industry
Analysis section below. For a more detailed explanation, please see the
revised Methodology at www.sba.gov/size.
Additionally, as the fifth factor, SBA evaluates the difference
between the small business share of Federal contract dollars and the
small business share of total industry receipts to compute the size
standard for the Federal contracting factor. The overall size standard
for an industry is then obtained by averaging all size standards
supported by each primary factor. The evaluation of the Federal
contracting factor is explained more fully in the Industry Analysis
section below.
SBA does not apply all aspects of its Methodology to all proposed
rules because not all features are relevant for every industry covered
by each proposed rule. For example, since all industries covered by
this proposed rule have receipts-based size standards, the Methodology
described in this proposed rule applies only to establishing,
reviewing, or modifying receipts-based size standards. SBA's
Methodology is available on its website at www.sba.gov/size.
Industry Analysis
Congress granted SBA's Administrator discretion to establish
detailed small business size standards. 15 U.S.C. 632(a)(2).
Specifically, section 3(a)(3) of the Small Business Act (15 U.S.C.
632(a)(3)) requires that ``. . . the [SBA] Administrator shall ensure
that the size standard varies from industry to industry to the extent
necessary to reflect the differing characteristics of the various
industries and consider other factors deemed to be relevant by the
[[Page 72586]]
Administrator.'' Accordingly, the economic structure of an industry is
the basis for establishing, reviewing, or modifying small business size
standards. In addition, SBA considers current economic conditions, its
mission and program objectives, the Administration's current policies,
impacts on small businesses under current size and proposed or revised
size standards, suggestions from industry groups and Federal agencies,
and public comments on the proposed rule. SBA also examines whether a
size standard based on industry and other relevant data successfully
excludes businesses that are dominant in the industry.
The goal of SBA's size standards review is to determine whether its
existing small business size standards reflect the current industry
structure and Federal market conditions and revise them when the latest
available data suggest that revisions are warranted. In the past, SBA
compared the characteristics of each industry with the average
characteristics of a group of industries associated with the ``anchor''
size standard. For example, in the first 5-year comprehensive review of
size standards under the Jobs Act, $7.0 million (now $8.0 million due
to the inflation adjustment in 2019; see 84 FR 34261, July 18, 2019)
was considered the ``anchor'' for receipts-based size standards and 500
employees was the ``anchor'' for employee-based size standards. If the
characteristics of a specific industry under review were similar to the
average characteristics of industries in the anchor group, SBA
generally adopted the anchor size standard for that industry. If the
specific industry's characteristics were significantly different from
those in the anchor group, SBA assigned a size standard that was higher
or lower than the anchor. To determine a size standard above or below
the anchor size standard, SBA evaluated the characteristics of a second
comparison group of industries with higher size standards. For
industries with receipts-based standards, the second comparison group
consisted of industries with size standards between $23.0 million and
$35.5 million, with the weighted average size standard for the group
equaling $29.0 million. For manufacturing industries and other
industries with employee-based size standards (except for Wholesale
Trade and Retail Trade), the second comparison group included
industries with a size standard of 1,000 employees or 1,500 employees,
with the weighted average size standard of 1,323 employees. Using the
anchor size standard and average size standard for the second
comparison group, SBA computed a size standard for an industry's
characteristic (factor) based on the industry's position for that
factor relative to the average values of the same factor for industries
in the anchor and second comparison groups.
Under the ``percentile'' approach, for each industry factor, an
industry is ranked and compared with the 20th percentile and 80th
percentile values of that factor among the industries sharing the same
measure of size standards (i.e., receipts or employees). Combining that
result with the 20th percentile and 80th percentile values of size
standards among the industries with the same measure of size standards,
SBA computes a size standard supported by each industry factor for each
industry. In the previous Methodology, comparison industry groups were
predetermined independent of the data, while in the revised Methodology
they are established using the actual data. A more detailed description
of the percentile method is provided in SBA's Methodology, available at
www.sba.gov/size.
The primary factors that SBA evaluates to examine industry
structure include average firm size, startup costs and entry barriers,
industry competition, and distribution of firms by size. SBA also
evaluates, as an additional primary factor, small business success in
receiving Federal contracting assistance under the current size
standards. Specifically, for the Federal contracting factor, SBA
examines the small business share of Federal contract dollars relative
to small business share of total receipts within an industry. These
are, generally, the five most important factors SBA examines when
establishing, reviewing, or revising a size standard for an industry.
However, SBA will also consider and evaluate other secondary factors
that it believes are relevant to a particular industry (such as
technological changes, growth trends, SBA financial assistance, and
other program factors). SBA also considers possible impacts of size
standard revisions on eligibility for Federal small business
assistance, current economic conditions, the Administration's policies,
and suggestions from industry groups and Federal agencies. Public
comments on proposed rules also provide important additional
information. SBA thoroughly reviews all public comments before making a
final decision on its proposed revisions to size standards. Below are
brief descriptions of each of the five primary factors that SBA has
evaluated for each industry being reviewed in this proposed rule. A
more detailed description of this analysis is provided in the SBA's
Methodology, available at www.sba.gov/size.
1. Average Firm Size
SBA computes two measures of average firm size: Simple average and
weighted average. For industries with receipts-based size standards,
the simple average is the total receipts of the industry divided by the
total number of firms in the industry. The weighted average firm size
is the summation of all the receipts of the firms in an industry
multiplied by their share of receipts in the industry. The simple
average weighs all firms within an industry equally regardless of their
size. The weighted average overcomes that limitation by giving more
weight to larger firms. The size standard supported by average firm
size is obtained by averaging size standards supported by simple
average firm size and weighted average firm size.
If the average firm size of an industry is higher than the average
firm size for most other industries, this would generally support a
size standard higher than the size standards for other industries.
Conversely, if the industry's average firm size is lower than that of
most other industries, it would provide a basis to assign a lower size
standard as compared to size standards for most other industries.
2. Startup Costs and Entry Barriers
Startup costs reflect a firm's initial size in an industry. New
entrants to an industry must have sufficient capital and other assets
to start and maintain a viable business. If firms entering an industry
under review have greater capital requirements than firms in most other
industries, all other factors remaining the same, this would be a basis
for a higher size standard. Conversely, if the industry has smaller
capital needs compared to most other industries, a lower size standard
would be considered appropriate.
Given the lack of actual data on startup costs and entry barriers
by industry, SBA uses average assets as a proxy for startup costs and
entry barriers. To calculate average assets, SBA begins with the sales
to total assets ratio for an industry from the Risk Management
Association's Annual Statement Studies, available at https://rmau.org.
SBA then applies these ratios to the average receipts of firms in that
industry obtained from the Economic Census tabulation. An industry with
average assets that are significantly
[[Page 72587]]
higher than most other industries is likely to have higher startup
costs; this in turn will support a higher size standard. Conversely, an
industry with average assets that are similar to or lower than most
other industries is likely to have lower startup costs; this will
support either lowering or maintaining the size standard.
3. Industry Competition
Industry competition is generally measured by the share of total
industry receipts generated by the largest firms in an industry. SBA
generally evaluates the share of industry receipts generated by the
four largest firms in each industry. This is referred to as the ``4-
firm concentration ratio,'' a commonly used economic measure of market
competition. Using the 4-firm concentration ratio, SBA compares the
degree of concentration within an industry to the degree of
concentration of the other industries with the same measure of size
standards. If a significantly higher share of economic activity within
an industry is concentrated among the four largest firms compared to
most other industries, all else being equal, SBA would set a size
standard that is relatively higher than for most other industries.
Conversely, if the market share of the four largest firms in an
industry is appreciably lower than the similar share for most other
industries, the industry will be assigned a size standard that is lower
than for most other industries.
4. Distribution of Firms by Size
SBA examines the shares of industry total receipts accounted for by
firms of different receipts and employment sizes in an industry. This
is an additional factor SBA considers in assessing competition within
an industry besides the 4-firm concentration ratio. If the
preponderance of an industry's economic activity is attributable to
smaller firms, this generally indicates that small businesses are
competitive in that industry, which would support adopting a smaller
size standard. A higher size standard would be supported for an
industry in which the distribution of firms indicates that most of the
economic activity is concentrated among the larger firms.
Concentration is a measure of inequality of distribution. To
determine the degree of inequality of distribution in an industry, SBA
computes the Gini coefficient, using the Lorenz curve. The Lorenz curve
presents the cumulative percentages of units (firms) along the
horizontal axis and the cumulative percentages of receipts (or other
measures of size) along the vertical axis. (For further detail, see
SBA's Methodology on its website at www.sba.gov/size.) Gini coefficient
values vary from zero to one. If receipts are distributed equally among
all the firms in an industry, the value of the Gini coefficient will
equal zero. If an industry's total receipts are attributable to a
single firm, the Gini coefficient will equal one.
SBA compares the degree of inequality of distribution for an
industry under review with other industries with the same type of size
standards. If an industry shows a higher degree of inequality of
distribution (hence a higher Gini coefficient value) compared to most
other industries in the group, this would, all else being equal,
warrant a size standard that is higher than the size standards assigned
to most other industries. Conversely, an industry with lower degree of
inequality (i.e., a lower Gini coefficient value) than most others will
be assigned a lower size standard relative to others.
5. Federal Contracting
As the fifth factor, SBA examines the success small businesses are
having in winning Federal contracts under the current size standard as
well as the possible impact a size standard change may have on Federal
small business contracting opportunities. The Small Business Act
requires the Federal Government to ensure that small businesses receive
a ``fair proportion'' of Federal contracts. The legislative history
also discusses the importance of size standards in Federal contracting.
To incorporate the Federal contracting factor in the size standards
analysis, SBA evaluates small business participation in Federal
contracting in terms of the share of total Federal contract dollars
awarded to small businesses relative to the small business share of
total receipts within an industry. In general, if the share of Federal
contract dollars awarded to small businesses in an industry is
significantly smaller than the small business share of total industry
receipts, all else remaining the same, a justification would exist for
considering a size standard higher than the current size standard. In
cases where small business share of the Federal market is already
appreciably high relative to the small business share of the overall
market, SBA generally assumes that the existing size standard is
adequate with respect to the Federal contracting factor.
The disparity between the small business Federal market share and
industry-wide small business share may be due to various factors, such
as extensive administrative and compliance requirements associated with
Federal contracts, the different skill set required to perform Federal
contracts as compared to typical commercial contracting work, and the
size of Federal contracts. These, as well as other factors, are likely
to influence the type of firms within an industry that compete for
Federal contracts. By comparing the small business Federal contracting
share with the industry-wide small business share, SBA includes in its
size standards analysis the latest Federal market conditions. Besides
the impact on Federal contracting, SBA also examines impacts on SBA's
loan programs both under the current and revised size standards.
Sources of Industry and Program Data
SBA's primary source of industry data used in this proposed rule
for evaluating industry characteristics and developing size standards
is a special tabulation of the Economic Census from the U.S. Census
Bureau (www.census.gov/econ/census). The tabulation based on the 2012
Economic Census is the latest available. The special tabulation
provides industry data on the number of firms, number of
establishments, number of employees, annual payroll, and annual
receipts of companies by Industry (6-digit level), Industry Group (4-
digit level), Subsector (3-digit level), and Sector (2-digit level).
These data are arrayed by various classes of firms' size based on the
overall number of employees and receipts of the entire enterprise (all
establishments and affiliated firms) from all industries. The special
tabulation also contains information for different levels of NAICS
categories on average and median firm size in terms of both receipts
and employment, total receipts generated by the four and eight largest
firms, the Herfindahl-Hirschman Index (HHI), the Gini coefficient, and
size distributions of firms by various receipts and employment size
groupings.
In some cases where data were not available due to disclosure
prohibitions in the Census Bureau's tabulation, SBA either estimated
missing values using available relevant data or examined data at a
higher level of industry aggregation, such as at the NAICS Sector (2-
digit), Subsector (3-digit), or Industry Group (4-digit) level. In some
instances, SBA's analysis was based only on those factors for which
data were available or estimates of missing values were possible.
To evaluate some industries that are not covered by the Economic
Census, SBA used a similar special tabulation of the latest County
Business Patterns
[[Page 72588]]
(CBP) published by the U.S. Census Bureau (www.census.gov/programs-surveys/cbp.html). Similarly, to evaluate industries in NAICS Sector 11
that are also not covered by the Economic Census and CBP, SBA evaluated
a similar special tabulation based on the 2012 Census of Agriculture
(www.nass.usda.gov) from the National Agricultural Statistics Service
(NASS). Besides the Economic Census, Agricultural Census and CBP
tabulations, SBA also evaluates relevant industry data from other
sources when necessary, especially for industries that are not covered
by the Economic Census or CBP. These include the Quarterly Census of
Employment and Wages (QCEW, also known as ES-202 data) (www.bls.gov/cew/) and Business Employment Dynamics (BED) data (www.bls.gov/bdm/)
from the U.S. Bureau of Labor Statistics. Similarly, to evaluate
certain financial industries that have asset-based size standards, SBA
examines the data from the Statistics on Depository Institutions (SDI)
database (www5.fdic.gov/sdi/main.asp) of the Federal Depository
Insurance Corporation (FDIC) data. Finally, to evaluate the capacity
component of the Petroleum Refiners (NAICS 324110) size standard, SBA
evaluates the petroleum production data from the Energy Information
Administration (www.eia.gov).
To calculate average assets, SBA used sales to total assets ratios
from the Risk Management Association's Annual eStatement Studies, 2016-
2018 (https://rmau.org). To evaluate Federal contracting trends and
evaluate two exceptions in Sector 11 and one exception in Sector 23,
SBA examined the data on Federal prime contract awards from the Federal
Procurement Data System--Next Generation (FPDS-NG) (www.fpds.gov) for
fiscal years 2016-2018. To assess the impact on financial assistance to
small businesses, SBA examined its internal data on 7(a) and 504 loan
programs for fiscal years 2016-2018. For some portion of impact
analysis, SBA also evaluated the data from the System of Award
Management (SAM) (www.sam.gov).
Data sources and estimation procedures SBA uses in its size
standards analysis are documented in detail in SBA's Methodology, which
is available at www.sba.gov/size.
Dominance in Field of Operation
Section 3(a) of the Small Business Act (15 U.S.C. 632(a)) defines a
small business concern as one that is: (1) Independently owned and
operated; (2) not dominant in its field of operation; and (3) within a
specific small business definition or size standard established by the
SBA Administrator. SBA considers as part of its evaluation whether a
business concern at a proposed size standard would be dominant in its
field of operation. For this, SBA generally examines the industry's
market share of firms at the proposed or revised size standard as well
as the distribution of firms by size. Market share and size
distribution may indicate whether a firm can exercise a major
controlling influence on a national basis in an industry where a
significant number of business concerns are engaged. If a contemplated
size standard includes a dominant firm, SBA will consider a lower size
standard to exclude the dominant firm from being defined as small.
Selection of Size Standards
In the 2009 Methodology, which SBA applied to the first 5-year
comprehensive review of size standards, SBA adopted a fixed number of
size standards levels as part of its effort to simplify size standards.
In response to public comments to the 2009 Methodology white paper, and
the 2013 amendment to the Small Business Act (section 3(a)(8)) under
section 1661 of the National Defense Authorization Act for Fiscal Year
2013 (``NDAA 2013'') (Pub. L. 112-239, January 2, 2013), in the revised
Methodology, SBA has relaxed the limitation on the number of small
business size standards. Specifically, section 1661 of NDAA 2013
states, ``SBA cannot limit the number of size standards, and shall
assign the appropriate size standard to each industry identified by
NAICS.''
In the revised Methodology, SBA calculates a separate size standard
for each NAICS industry. However, to account for errors and limitations
associated with various data that SBA evaluates in the size standards
analysis, SBA rounds the calculated size standard value for a receipts-
based size standard to the nearest $500,000, except for agricultural
industries in Subsectors 111 and 112 for which the calculated size
standards will be rounded to the nearest $250,000. This rounding
procedure is applied both in calculating a size standard for each of
the five primary factors and in calculating the overall size standard
for the industry.
As a policy decision, SBA continues to maintain the minimum and
maximum levels for both receipts and employee-based size standards.
Accordingly, SBA will not generally propose or adopt a size standard
that is either below the minimum level or above the maximum, even
though the calculations yield values below the minimum or above the
maximum. The minimum size standard reflects the size an established
small business should be to have adequate capabilities and resources to
be able to compete for and perform Federal contracts (but does not
account for small businesses that are newly formed or just starting
operations). On the other hand, the maximum size standard represents
the level above which businesses, if qualified as small, would
outcompete much smaller businesses when accessing Federal assistance.
With respect to receipts-based size standards, SBA has established
$6.0 million and $41.5 million, respectively, as the minimum and
maximum size standard levels (except for most agricultural industries
in NAICS Subsectors 111 and 112). These levels reflect the current
minimum of $6.0 million and the current maximum of $41.5 million in
SBA's existing size standards. The industry data suggests that $6.0
million minimum and $41.5 million maximum size standards would be too
high for agricultural industries. Accordingly, SBA has established $1.0
million as the minimum size standard and $5.0 million as the maximum
size standard for industries in Subsector 111 (Crop Production) and
Subsector 112 (Animal Production and Aquaculture).
Evaluation of Industry Factors
As mentioned earlier, to assess the appropriateness of the current
size standards, SBA evaluates the structure of each industry in terms
of four economic characteristics or factors: Average firm size, average
assets size as a proxy for startup costs and entry barriers, the 4-firm
concentration ratio as a measure of industry competition, and size
distribution of firms using the Gini coefficient. For each size
standard type (i.e., receipts-based or employee-based), SBA ranks
industries both in terms of each of the four industry factors and in
terms of the existing size standard and computes the 20th percentile
and 80th percentile values for both. SBA then evaluates each industry
by comparing its value for each industry factor to the 20th percentile
and 80th percentile values for the corresponding factor for industries
under a particular type of size standard.
If the characteristics of an industry under review within a
particular size standard type are similar to the average
characteristics of industries within the same size standard type in the
20th percentile, SBA will consider adopting as an appropriate size
standard for that industry the 20th percentile value of size standards
for those industries. For each size standard type, if the industry's
[[Page 72589]]
characteristics are similar to the average characteristics of
industries in the 80th percentile, SBA will assign a size standard that
corresponds to the 80th percentile in the size standard rankings of
industries. A separate size standard is established for each factor
based on the amount of differences between the factor value for an
industry under a particular size standard type and 20th percentile and
80th percentile values for the corresponding factor for all industries
in the same type. Specifically, the actual level of the new size
standard for each industry factor is derived by a linear interpolation
using the 20th percentile and 80th percentile values of that factor and
corresponding percentiles of size standards. Each calculated size
standard is bounded between the minimum and maximum size standards
levels, as discussed before. As noted earlier, the calculated value for
a receipts-based size standard for each industry factor is rounded to
the nearest $500,000, except for industries in Subsectors 111 and 112
for which a calculated size standard is rounded to the nearest
$250,000.
Table 2, 20th and 80th Percentiles of Industry Factors for
Receipts-Based Size Standards, shows the 20th percentile and 80th
percentile values for average firm size (simple and weighted), average
assets size, 4-firm concentration ratio, and Gini coefficient for
industries with receipts-based size standards.
Table 2--20th and 80th Percentiles of Industry Factors for Receipts-Based Size Standards
--------------------------------------------------------------------------------------------------------------------------------------------------------
Simple average Weighted average Average assets 4-Firm
Industries/percentiles receipts size receipts size ($ size ($ concentration Gini coefficient
($ million) million) million) ratio (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Industries, excluding Subsectors 111 and 112
20th percentile............................................ 0.83 19.42 0.34 7.9 0.686
80th percentile............................................ 7.52 830.65 5.19 42.4 0.834
Industries in Subsectors 111 and 112
20th percentile............................................ 0.06 1.48 0.07 1.7 0.608
80th percentile............................................ 0.83 13.32 0.88 12.3 0.908
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimation of Size Standards Based on Industry Factors
An estimated size standard supported by each industry factor is
derived by comparing its value for a specific industry to the 20th
percentile and 80th percentile values for that factor. If an industry's
value for a particular factor is near the 20th percentile value in the
distribution, the supported size standard will be one that is close to
the 20th percentile value of size standards for industries in the size
standards group, which is $8.0 million. If a factor for an industry is
close to the 80th percentile value of that factor, it would support a
size standard that is close to the 80th percentile value in the
distribution of size standards, which is $35.0 million. For a factor
that is within, above, or below the 20-80th percentile range, the size
standard is calculated using linear interpolation based on the 20th
percentile and 80th percentile values for that factor and the 20th
percentile and 80th percentile values of size standards.
For example, if an industry's simple average receipts are $1.9
million, that would support a size standard of $12.5 million. According
to Table 2, the 20th percentile and 80th percentile values of average
receipts are $0.83 million and $7.52 million, respectively. The $1.9
million is 15.9% between the 20th percentile value ($0.83 million) and
the 80th percentile value ($7.52 million) of simple average receipts
(($1.9 million-$0.83 million) / ($7.52 million-$0.83 million) = 0.159
or 15.9%). Applying this percentage to the difference between the 20th
percentile value ($8 million) and 80th percentile ($35.0 million) value
of size standards and then adding the result to the 20th percentile
size standard value ($8.0 million) yields a calculated size standard
value of $12.32 million ([{$35.0 million-$8.0 million{time} * 0.159] +
$8.0 million = $12.32 million). The final step is to round the
calculated $12.32 million size standard to the nearest $500,000, which
in this example yields $12.5 million. This procedure is applied to
calculate size standards supported by other industry factors.
Detailed formulas involved in these calculations are presented in
SBA's Methodology, which is available on its website at www.sba.gov/size.
Derivation of Size Standards Based on Federal Contracting Factor
Besides industry structure, SBA also evaluates Federal contracting
data to assess the success of small businesses in getting Federal
contracts under the existing size standards. For each industry with $20
million or more in annual Federal contract dollars, SBA evaluates the
small business share of total Federal contract dollars relative to the
small business share of total industry receipts. All other factors
being equal, if the share of Federal contracting dollars awarded to
small businesses in an industry is significantly less than the small
business share of that industry's total receipts, a justification would
exist for considering a size standard higher than the current size
standard. Conversely, if the small business share of Federal
contracting activity is near or above the small business share of total
industry receipts, this will support the current size standard.
SBA increases the existing size standards by certain percentages
when the small business share of total industry receipts exceeds the
small business share of total Federal contract dollars by 10 or more
percentage points. Proposed percentage increases generally reflect
receipts levels needed to bring the small business share of Federal
contracts on par with the small business share of industry receipts.
These proposed percentage increases for receipts-based size standards
are given in Table 3, Proposed Adjustments to Size Standards Based on
Federal Contracting Factor.
[[Page 72590]]
Table 3--Proposed Adjustments to Size Standards Based on Federal Contracting Factor
----------------------------------------------------------------------------------------------------------------
Percentage difference between the small business shares of total Federal
contract dollars in an industry and of total industry receipts
Size standards --------------------------------------------------------------------------
>-10% -10% to -30% <- 30%
----------------------------------------------------------------------------------------------------------------
Receipts-based standards:
< $15.0 million.................. No change.............. Increase 30%........... Increase 60%.
$15.0 million to < $25.0 million. No change.............. Increase 20%........... Increase 40%.
$25.0 million to < $41.5 million. No change.............. Increase 15%........... Increase 25%.
----------------------------------------------------------------------------------------------------------------
For example, if an industry with the current size standard of $8.0
million had an average of $50 million in Federal contracting dollars,
of which 15% went to small businesses, and if that small businesses
accounted for 40% of total receipts of that industry, the small
business share of total Federal contract dollars would be 25% less than
the small business share of total industry receipts (40%-15%).
According to the adjustment above, the new size standard for the
Federal contracting factor for that industry would be set by
multiplying the current $8.0 million standard by 1.3 (i.e., 30%
increase) and then by rounding the result to the nearest $500,000,
yielding a size standard of $10.5 million.
SBA evaluated the small business share of total Federal contract
dollars for the 61 industries covered by this proposed rule--31 in
Sector 54, and 30 in Sector 56--that had $20 million or more in average
annual Federal contract dollars during fiscal years 2016-2018. The
Federal contracting factor was significant (i.e., the difference
between the small business share of total industry receipts and small
business share of Federal contracting dollars was 10 percentage points
or more) in 28 of these industries, prompting an upward adjustment of
their existing size standards based on that factor. For the remaining
33 industries that averaged $20 million or more in average annual
contract dollars, the Federal contracting factor was not significant,
and the existing size standard was applied for that factor. For
industries with less than $20 million in average annual contract
dollars, no size standard was calculated for the Federal contracting
factor.
Derivation of Overall Industry Size Standard
The SBA's Methodology presented above results in five separate size
standards based on evaluation of the five primary factors (i.e., four
industry factors and one Federal contracting factor). SBA typically
derives an industry's overall size standard by assigning equal weights
to size standards supported by each of these five factors. However, if
necessary, SBA's Methodology would allow assigning different weights to
some of these factors in response to its policy decisions and other
considerations. For detailed calculations, see SBA's Methodology,
available on its website at www.sba.gov/size.
Calculated Size Standards Based on Industry and Federal Contracting
Factors
Table 4, Size Standards Supported by Each Factor for Each Industry
(Receipts), shows the results of analyses of industry and Federal
contracting factors for each industry and subindustry (exception)
covered by this proposed rule. NAICS industries in columns 2, 3, 4, 5,
6, 7, and 8 show two numbers. The upper number is the value for the
industry or Federal contracting factor shown on the top of the column
and the lower number is the size standard supported by that factor.
Column 9 shows a calculated new size standard for each industry. This
is the average of the size standards supported by each factor (the size
standard for average firm size is an average of size standards
supported by simple average firm size and weighted average firm size),
rounded to the nearest $500,000 for non-agriculture industries and
rounded to the nearest $250,000 for agriculture industries. Analytical
details involved in the averaging procedure are described in SBA's
Methodology, which is available on its website at www.sba.gov/size. For
comparison with the calculated new size standards, the current size
standards are in column 10 of Table 4.
Table 4--Size Standards Supported by Each Factor for Each Industry (Receipts)
[Upper value = calculated factor, lower value = size standard supported]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Simple Weighted Calculated Current
average average Average Four-firm Gini Federal size size
NAICS code NAICS industry title Type firm size firm size assets size ratio % coefficient contract standard ($ standard ($
($ million) ($ million) ($ million) factor (%) million) million)
(1) (2)............ (3) (4) (5) (6) (7) (8) (9) (10)
--------------------------------------------------------------------------------------------------------------------------------------------------------
541110 Offices of Lawyers...... Factor......... $1.5 $223.3 $0.3 2.7 0.775 -20.8 $13.5 $12.0
Size Std....... 10.5 15.0 8.0 $6.0 $24.0 $15.5
541191 Title Abstract and Factor......... 1.3 278.1 0.5 27.5 0.763 ........... 17.0 12.0
Settlement Offices. Size Std....... 9.5 16.5 8.5 $23.5 $22.0
541199 All Other Legal Services Factor......... 1.1 95.9 0.4 29.6 0.792 -38.8 18.0 12.0
Size Std....... 9.0 10.5 8.0 $25.0 $27.5 $19.0
541211 Offices of Certified Factor......... 1.4 2,879.6 0.5 37.2 0.782 -14.0 23.5 22.0
Public Accountants. Size Std....... 10.5 41.5 8.5 $31.0 $25.5 $26.5
541213 Tax Preparation Services Factor......... 0.3 641.9 0.2 ........... 0.708 ........... 12.0 22.0
Size Std....... 6.0 28.5 7.0 $12.0
541214 Payroll Services........ Factor......... 6.5 2,094.0 2.9 49.6 0.854 ........... 34.5 22.0
Size Std....... 30.5 41.5 22.5 $40.5 $38.5
541219 Other Accounting Factor......... 0.5 282.8 0.2 18.8 0.751 -35.3 17.5 22.0
Services. Size Std....... 6.5 17.0 7.0 $16.5 $20.0 $31.0
541310 Architectural Services.. Factor......... 1.4 54.8 0.5 5.8 0.748 -12.8 11.0 8.0
Size Std....... 10.5 9.0 9.0 $6.5 $19.5 $10.5
541320 Landscape Architectural Factor......... 0.6 4.3 0.2 4.5 0.642 ........... 6.5 8.0
Services. Size Std....... 7.0 7.5 7.0 $6.0 $6.0
541330 Engineering Services.... Factor......... 4.5 1,396.0 1.7 13.1 0.839 0.1 22.5 16.5
Size Std....... 23.0 41.5 16.0 $12.0 $36.0 $16.5
[[Page 72591]]
Except Military and Aerospace Factor......... 3,225.7 70,551.0 1,271.8 35.7 0.883 12.6 39.0 41.5
Equipment and Military Weapons. Size Std....... 41.5 41.5 41.5 $30.0 $41.5 $41.5
Except Contracts and Factor......... ........... ........... ........... ........... ........... ........... 39.0 41.5
Subcontracts for Engineering Size Std.......
Services Awarded Under the
National Energy Policy Act of
1992.
Except Marine Engineering and Factor......... 2,639.7 73,130 1,055.9 52.5 0.882 3.4 41.5 41.5
Naval Architecture. Size Std....... 41.5 41.5 41.5 $41.5 $41.5 $41.5
541340 Drafting Services....... Factor......... 0.4 2.9 0.1 7.2 0.673 ........... 7.0 8.0
Size Std....... 6.0 7.5 7.0 $7.5 $6.0
541350 Building Inspection Factor......... 0.4 18.1 0.1 12.5 0.702 -65.2 10.0 8.0
Services. Size Std....... 6.0 8.0 7.0 $11.5 $11.0 $13.0
541360 Geophysical Surveying Factor......... 4.5 201.6 1.7 43.2 0.861 -3.5 25.0 16.5
and Mapping Services. Size Std....... 22.5 14.0 15.5 $35.5 $40.0 $16.5
541370 Surveying and Mapping Factor......... 0.7 57.4 0.3 16.6 0.730 -42.3 14.0 16.5
(except Geophysical) Services. Size Std....... 7.5 9.5 7.5 $15.0 $16.0 $23.0
541380 Testing Laboratories.... Factor......... 3.0 111.5 1.3 13.2 0.766 -16.8 16.5 16.5
Size Std....... 16.5 11.0 13.5 $12.0 $22.5 $20.0
541410 Interior Design Services Factor......... 0.7 4.6 0.2 2.4 0.640 ........... 6.5 8.0
Size Std....... 7.5 7.5 7.0 $6.0 $6.0
541420 Industrial Design Factor......... 1.2 37.4 0.5 24.3 0.756 ........... 15.0 8.0
Services. Size Std....... 9.5 8.5 8.5 $21.0 $21.0
541430 Graphic Design Services. Factor......... 0.5 6.7 0.2 3.5 0.688 16.5 7.5 8.0
Size Std....... 6.5 7.5 7.0 $6.0 $8.5 $8.0
541490 Other Specialized Design Factor......... 0.8 14.7 0.3 15.3 0.741 ........... 12.0 8.0
Services. Size Std....... 8.0 8.0 7.5 $14.0 $18.0
541511 Custom Computer Factor......... 2.0 616.8 0.7 11.8 0.813 -7.3 20.5 30.0
Programming Services. Size Std....... 12.5 28.0 9.5 $11.0 $31.0 $30.0
541512 Computer Systems Design Factor......... 4.3 3,438.4 1.3 24.4 0.859 8.0 27.0 30.0
Services. Size Std....... 22.0 41.5 13.0 $21.0 $39.5 $30.0
541513 Computer Facilities Factor......... 5.8 7,617.4 1.7 59.2 0.866 27.1 32.5 30.0
Management Services. Size Std....... 28.0 41.5 15.5 $41.5 $40.5 $30.0
541519 Other Computer Related Factor......... 1.9 268.0 0.5 20.1 0.829 11.6 21.0 30.0
Services. Size Std....... 12.0 16.5 9.0 $17.5 $34.0 $30.0
541611 Administrative Factor......... 1.6 2,532.2 0.5 27.9 0.824 4.8 21.5 16.5
Management and General Size Std....... 11.0 41.5 9.0 $23.5 $33.0 $16.5
Management Consulting Services.
541612 Human Resources Factor......... 2.6 1,154.7 0.7 42.7 0.843 20.8 25.5 16.5
Consulting Services. Size Std....... 15.0 41.5 10.0 $35.0 $36.5 $16.5
541613 Marketing Consulting Factor......... 1.1 95.4 0.4 8.1 0.781 -28.1 14.5 16.5
Services. Size Std....... 9.0 10.5 8.0 $8.0 $25.5 $20.0
541614 Process, Physical Factor......... 2.0 113.9 0.7 15.3 0.814 -11.2 17.5 16.5
Distribution, and Logistics Size Std....... 12.5 11.0 10.0 $13.5 $31.0 $20.0
Consulting Services.
541618 Other Management Factor......... 0.6 17.8 0.2 9.8 0.735 -42.9 13.0 16.5
Consulting Services. Size Std....... 7.5 8.0 7.5 $9.5 $17.0 $23.0
541620 Environmental Consulting Factor......... 1.5 51.8 0.6 8.4 0.773 3.2 13.5 16.5
Services. Size Std....... 11.0 9.0 9.5 $8.5 $24.0 $16.5
541690 Other Scientific and Factor......... 1.2 135.7 0.4 11.6 0.787 -22.9 15.5 16.5
Technical Consulting Services. Size Std....... 9.5 12.0 8.5 $11.0 $26.5 $20.0
541720 Research and Development Factor......... 3.5 208.8 2.4 31.9 0.830 -21.7 24.5 22.0
in the Social Sciences and Size Std....... 19.0 14.5 19.0 $26.5 $34.0 $26.5
Humanities.
541810 Advertising Agencies.... Factor......... 2.9 896.3 0.9 30.1 0.801 -20.8 22.5 16.5
Size Std....... 16.0 37.0 11.0 $25.5 $29.0 $20.0
541820 Public Relations Factor......... 1.3 137.2 0.4 21.6 0.757 5.6 15.0 16.5
Agencies. Size Std....... 10.0 12.0 8.0 $18.5 $21.0 $16.5
541830 Media Buying Agencies... Factor......... 8.4 283.3 2.6 35.7 0.838 ........... 28.5 16.5
Size Std....... 38.5 17.0 20.5 $30.0 $35.5
541840 Media Representatives... Factor......... 2.3 79.4 0.8 26.0 0.807 ........... 18.5 16.5
Size Std....... 14.0 10.0 10.5 $22.0 $30.0
541850 Outdoor Advertising..... Factor......... 3.3 622.5 2.8 54.8 0.842 ........... 30.5 16.5
Size Std....... 18.0 28.0 21.5 $41.5 $36.5
541860 Direct Mail Advertising. Factor......... 3.8 265.8 1.4 24.4 0.781 ........... 19.5 16.5
Size Std....... 20.0 16.0 14.0 $21.0 $25.5
541870 Advertising Material Factor......... 3.8 156.6 1.5 41.4 0.839 ........... 25.0 16.5
Distribution Services. Size Std....... 20.0 12.5 14.0 $34.0 $36.0
541890 Other Services Related Factor......... 1.8 89.4 0.6 13.1 0.780 -42.3 16.0 16.5
to Advertising. Size Std....... 12.0 10.5 9.0 $12.0 $25.0 $23.0
541910 Marketing Research and Factor......... 3.6 339.8 1.3 21.6 0.815 11.4 20.0 16.5
Public Opinion Polling. Size Std....... 19.5 18.5 13.5 $18.5 $31.5 $16.5
541921 Photography Studios, Factor......... 0.4 129.9 0.2 28.3 0.727 ........... 14.0 8.0
Portrait. Size Std....... 6.5 11.5 7.0 $24.0 $15.5
541922 Commercial Photography.. Factor......... 0.5 5.4 0.2 7.9 0.674 -50.2 8.0 8.0
Size Std....... 6.5 7.5 7.0 $8.0 $6.0 $13.0
541930 Translation and Factor......... 1.9 218.3 0.6 39.3 0.840 1.3 20.0 8.0
Interpretation Services. Size Std....... 12.0 14.5 9.5 $32.5 $36.0 $8.0
541940 Veterinary Services..... Factor......... 1.1 106.9 0.3 9.2 0.529 -64.5 9.0 8.0
Size Std....... 9.0 11.0 7.5 $9.0 $6.0 $13.0
541990 All Other Professional, Factor......... 1.0 194.6 0.3 19.1 0.784 -34.1 17.0 16.5
Scientific and Technical Size Std....... 8.5 14.0 8.0 $17.0 $26.0 $23.0
Services.
551111 Offices of Bank Holding Factor......... 10.1 402.8 5.9 ........... 0.818 ........... 34.0 22.0
Companies. Size Std....... 41.5 21.0 39.0 $32.0
551112 Offices of Other Holding Factor......... 10.8 2,312.4 13.5 ........... 0.848 ........... 40.0 22.0
Companies. Size Std....... 41.5 41.5 41.5 $37.5
561110 Office Administrative Factor......... 1.5 25.7 0.6 2.1 0.761 32.7 11.0 8.0
Services. Size Std....... 10.5 8.0 9.5 $6.0 $21.5 $8.0
561210 Facilities Support Factor......... 13.8 665.1 3.8 25.6 0.841 -5.2 32.5 41.5
Services. Size Std....... 41.5 29.5 27.5 $22.0 $36.0 $41.5
561311 Employment Placement Factor......... 2.0 242.2 0.4 23.7 0.797 -21.8 21.0 30.0
Agencies. Size Std....... 12.5 15.5 8.0 $20.5 $28.0 $34.5
[[Page 72592]]
561312 Executive Search Factor......... 1.0 61.7 0.2 17.9 0.726 ........... 12.0 30.0
Services. Size Std....... 8.5 9.5 7.0 $16.0 $15.5
561320 Temporary Help Services. Factor......... 9.0 1,130.0 1.7 14.0 0.819 48.5 26.5 30.0
Size Std....... 41.0 41.5 15.5 $13.0 $32.0 $30.0
561330 Professional Employer Factor......... 30.7 5,898.1 4.9 43.6 0.865 80.2 36.5 30.0
Organizations. Size Std....... 41.5 41.5 33.5 $36.0 $40.5 $30.0
561410 Document Preparation Factor......... 0.8 74.8 0.3 26.6 0.790 40.9 16.5 16.5
Services. Size Std....... 8.0 10.0 7.5 $22.5 $27.0 $16.5
561421 Telephone Answering Factor......... 1.5 42.7 0.7 24.0 0.740 ........... 14.5 16.5
Services. Size Std....... 10.5 9.0 9.5 $20.5 $18.0
561422 Telemarketing Bureaus Factor......... 6.1 312.0 2.0 21.2 0.827 -19.9 22.5 16.5
and Other Contact Centers. Size Std....... 29.5 17.5 17.0 $18.5 $33.5 $20.0
561431 Private Mail Centers.... Factor......... 0.5 15.1 0.2 13.5 0.526 ........... 8.5 16.5
Size Std....... 6.5 8.0 7.0 $12.5 $6.0
561439 Other Business Service Factor......... 2.1 452.9 0.7 43.0 0.805 ........... 23.5 16.5
Centers (including Copy Shops). Size Std....... 13.5 22.5 10.0 $35.5 $29.5
561440 Collection Agencies..... Factor......... 3.1 123.3 1.1 15.2 0.792 43.6 17.0 16.5
Size Std....... 17.0 11.5 12.0 $13.5 $27.5 $16.5
561450 Credit Bureaus.......... Factor......... 19.3 824.1 6.7 59.9 0.878 22.4 36.0 16.5
Size Std....... 41.5 35.0 41.5 $41.5 $41.5 $16.5
561491 Repossession Services... Factor......... 0.8 7.6 0.2 17.1 0.663 ........... 9.0 16.5
Size Std....... 8.0 7.5 7.0 $15.0 $6.0
561492 Court Reporting and Factor......... 0.6 35.1 0.2 22.5 0.743 27.3 14.0 16.5
Stenotype Services. Size Std....... 7.0 8.5 7.5 $19.5 $18.5 $16.5
561499 All Other Business Factor......... 2.3 138.8 1.0 23.7 0.810 -17.6 19.0 16.5
Support Services. Size Std....... 14.0 12.0 11.5 $20.5 $30.5 $20.0
561510 Travel Agencies......... Factor......... 1.4 303.8 0.5 25.8 0.798 10.4 19.0 22.0
Size Std....... 10.5 17.5 8.5 $22.0 $28.5 $22.0
561520 Tour Operators.......... Factor......... 2.0 52.5 0.9 15.4 0.741 ........... 13.5 22.0
Size Std....... 13.0 9.0 11.0 $14.0 $18.0
561591 Convention and Visitors Factor......... 1.7 28.5 0.5 19.3 0.745 ........... 13.5 22.0
Bureaus. Size Std....... 11.5 8.5 9.0 $17.0 $18.5
561599 All Other Travel Factor......... 8.6 469.4 3.7 31.9 0.840 67.1 28.5 22.0
Arrangement and Reservation Size Std....... 39.5 23.0 27.0 $26.5 $36.0 $22.0
Services.
561611 Investigation Services.. Factor......... 1.1 318.4 0.3 36.2 0.810 -27.2 21.5 22.0
Size Std....... 9.0 18.0 7.5 $30.0 $30.5 $26.5
561612 Security Guards and Factor......... 3.8 908.2 0.8 35.1 0.845 1.3 25.5 22.0
Patrol Services. Size Std....... 20.0 37.5 10.5 $29.5 $37.0 $22.0
561613 Armored Car Services.... Factor......... 22.7 509.9 5.1 89.6 0.871 ........... 38.0 22.0
Size Std....... 41.5 24.5 35.0 $41.5 $41.5
561621 Security Systems Factor......... 2.7 479.5 1.2 23.9 0.797 0.2 20.5 22.0
Services (except Locksmiths). Size Std....... 15.5 23.5 12.5 $20.5 $28.0 $22.0
561622 Locksmiths.............. Factor......... 0.5 5.0 0.2 8.3 0.603 ........... 7.0 22.0
Size Std....... 6.5 7.5 7.0 $8.5 $6.0
561710 Exterminating and Pest Factor......... 0.9 328.1 0.3 28.1 0.752 21.5 15.5 12.0
Control Services. Size Std....... 8.5 18.5 7.5 $24.0 $20.0 $12.0
561720 Janitorial Services..... Factor......... 0.7 201.8 0.2 11.2 0.785 26.6 15.0 19.5
Size Std....... 7.5 14.0 7.0 $10.5 $26.0 $19.5
561730 Landscaping Services.... Factor......... 0.6 168.6 0.2 9.6 0.688 11.3 8.5 8.0
Size Std....... 7.0 13.0 7.0 $9.5 $8.5 $8.0
561740 Carpet and Upholstery Factor......... 0.4 14.3 0.1 9.4 0.673 ........... 7.5 6.0
Cleaning Services. Size Std....... 6.5 8.0 7.0 $9.0 $6.0
561790 Other Services to Factor......... 0.5 13.0 0.2 7.1 0.645 -46.7 8.0 8.0
Buildings and Dwellings. Size Std....... 6.5 8.0 7.0 $7.5 $6.0 $13.0
561910 Packaging and Labeling Factor......... 4.0 59.3 1.5 14.0 0.781 -13.8 17.0 12.0
Services. Size Std....... 21.0 9.5 14.5 $13.0 $25.5 $15.5
561920 Convention and Trade Factor......... 2.6 287.8 0.9 24.0 0.800 46.7 17.5 12.0
Show Organizers. Size Std....... 15.5 17.0 11.0 $20.5 $28.5 $12.0
561990 All Other Support Factor......... 1.7 119.3 0.8 10.9 0.779 -28.2 14.5 12.0
Services. Size Std....... 11.5 11.5 10.5 $10.5 $25.0 $15.5
562111 Solid Waste Collection.. Factor......... 5.4 3,163.1 3.2 46.6 0.821 38.2 34.0 41.5
Size Std....... 26.5 41.5 23.5 $38.5 $32.5 $41.5
562112 Hazardous Waste Factor......... 7.0 129.9 4.1 43.5 0.789 33.3 31.0 41.5
Collection. Size Std....... 33.0 11.5 29.0 $36.0 $27.0 $41.5
562119 Other Waste Collection.. Factor......... 2.1 103.4 1.2 41.4 0.779 -26.1 25.0 41.5
Size Std....... 13.0 11.0 13.0 $34.0 $25.0 $41.5
562211 Hazardous Waste Factor......... 15.6 569.0 10.4 49.9 0.840 -10.2 39.0 41.5
Treatment and Disposal. Size Std....... 41.5 26.5 41.5 $41.0 $36.0 $41.5
562212 Solid Waste Landfill.... Factor......... 7.5 834.7 6.8 64.6 0.845 ........... 39.0 41.5
Size Std....... 35.0 35.0 41.5 $41.5 $37.0
562213 Solid Waste Combustors Factor......... 56.6 1,040.3 43.5 92.5 0.863 ........... 41.0 41.5
and Incinerators. Size Std....... 41.5 41.5 41.5 $41.5 $40.0
562219 Other Nonhazardous Waste Factor......... 3.4 29.0 2.8 40.2 0.711 -22.5 24.5 41.5
Treatment and Disposal. Size Std....... 18.5 8.5 21.5 $33.5 $12.5 $41.5
562910 Remediation Services.... Factor......... 4.3 128.5 2.0 13.3 0.774 -8.3 18.5 22.0
Size Std....... 22.0 11.5 17.0 $12.0 $24.0 $22.0
562920 Materials Recovery Factor......... 5.2 276.0 2.5 28.8 0.753 ........... 21.5 22.0
Facilities. Size Std....... 25.5 16.5 20.0 $24.5 $20.5
562991 Septic Tank and Related Factor......... 0.8 16.1 0.4 11.4 0.642 9.2 8.0 8.0
Services. Size Std....... 8.0 8.0 8.0 $10.5 $6.0 $8.0
562998 All Other Miscellaneous Factor......... 1.7 45.4 0.9 26.2 0.714 ........... 14.5 8.0
Waste Management Services. Size Std....... 11.5 9.0 11.0 $22.5 $13.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 72593]]
Evaluation of Size Standards for Subindustry Categories or
``Exceptions''
In accordance with SBA's approach to evaluating size standards for
subindustry categories (or ``exceptions''), SBA has evaluated the three
(3) exceptions covered by this proposed rule using the procedures
described in the revised SBA's Methodology. The results of that
analysis are discussed in the following subsection.
Exceptions to NAICS 541330: Military and Aerospace Equipment and
Military Weapons; Contracts and Subcontracts for Engineering Services
Awarded Under the National Energy Policy Act of 1992; Marine
Engineering and Naval Architecture
Currently, NAICS 541330 has four size standards that apply to
Federal contracts for different types of engineering services. The
$16.5 million size standard is for general engineering services, while
the $41.5 million size standard for the three exceptions apply to
specialized types of engineering services that the Federal Government
procures. These exceptions apply only to Federal contracts for those
services. In the prior comprehensive review, 16 commenters addressed
SBA's proposal to retain the then current $27.0 million size standard
for the exceptions. All believed that the $27.0 million size standard
was too low and needed to be increased. Commenters expressed concern
that small firms that exceed this size standard would not be able to
compete with the midsize and very large firms that exist in this
market. Commenters also pointed out that contracts for the exceptions
tend to be large already and were trending upwards each year.
SBA agreed with commenters that the size standard for the two
engineering ``exceptions'' (Military and Aerospace Equipment and
Military Weapons, and Marine Engineering and Naval Architecture) should
be increased, and as such, SBA adopted a size standard of $35.5 million
for all three of the exceptions.\1\ Thereafter, to account for
inflation during the period, SBA increased the $35.5 million size
standard for the three exceptions to $38.5 Million in 2014 (79 FR
33647, June 12, 2014), and to the current maximum size level of $41.5
in 2019 (84 FR 34261, July 18, 2019).
---------------------------------------------------------------------------
\1\ As required by law, SBA also adopted the $35.5 million size
standard for the third ``exception'' to NAICS 541330 (Contracts and
Subcontracts for Engineering Services Awarded Under the National
Energy Policy Act of 1992). Section 3021(b)(1) of Public Law 102-
486, the National Energy Policy Act of 1992 (106 Stat. 2776, 3133)
states that ``for purposes of contracts and subcontracts requiring
engineering services (awarded under this Act) the applicable size
standard shall be that established for Military and Aerospace
Equipment and Military Weapons.''
---------------------------------------------------------------------------
As noted previously, the data from the Economic Census special
tabulation are limited down to the 6-digit NAICS industry level and
hence do not provide data to assess economic characteristics at the
subindustry level. For example, the Economic Census data for NAICS
541330 are aggregates of both general engineering services and
specialized engineering services under the three ``exceptions.'' The
lack of relevant data at the subindustry level makes it challenging to
determine whether these size standards (``exceptions'') should be
revised or left unchanged. Thus, the results based on the Economic
Census data may not accurately reflect the characteristics of
businesses providing specialized services included under those
``exceptions.''
To determine whether the Agency should propose revising the three
exceptions under NAICS 541330, SBA evaluated the data from FPDS-NG and
SAM. From FPDS-NG, SBA first identified Product Service Codes (PSCs)
that correspond to each specific subindustry activity or ``exception''
under that NAICS code and then identified firms that are active in
Federal contracting involving those PSCs. Including the exceptions, SBA
identified a total of 1,257 PSCs corresponding to the activity of
engineering services. The total average contract dollars obligated
under these PSCs was $29.9 billion. From this group, SBA identified a
subgroup of 168 PSCs corresponding to the Military and Aerospace
Equipment and Military Weapons exception, and 40 PSCs corresponding to
the Marine Engineering and Naval Architecture exception. The total
average contract dollars obligated under these PSCs was $3.2 billion
and $1.9 billion, respectively.
The data for fiscal year 2018 showed numerous firms doing contracts
under Military and Aerospace Equipment and Military Weapons and Marine
Engineering and Naval Architecture. SBA analyzed those firms' revenue
and employment data from SAM and contract dollars from FPDS-NG to
evaluate industry and Federal procurement factors. These results,
presented in Table 4 of this proposed rule, support a size standard of
$39.0 million for the Military and Aerospace Equipment and Military
Weapons Exception and $41.5 million for the Marine Engineering and
Naval Architecture. The FPDS-NG showed very few actions involving
Contracts and Subcontracts for Engineering Services Awarded Under the
National Energy Policy Act of 1992. However, for purposes of contracts
and subcontracts, the National Energy Policy Act of 1992 requires that
the applicable size standard must be established for Military and
Aerospace Equipment and Military Weapons (106 Stat. 2776, 3133).
Summary of Calculated Size Standards
Of the 91 industries and 3 subindustries (i.e. exceptions) reviewed
in this proposed rule, the results from analyses of the latest
available data on the five primary factors from Table 4, Size Standards
Supported by Each Factor for Each Industry (millions of dollars),
above, would support increasing size standards for 46 industries,
decreasing size standards for 43 industries and 3 subindustries, and
maintaining size standards for 6 industries. Table 5, Summary of
Calculated Size Standards, summarizes these results by NAICS sector.
Table 5--Summary of Calculated Size Standards
----------------------------------------------------------------------------------------------------------------
Number of size Number of size Number of size Number of size
Sector Sector name standards standards standards standards
reviewed increased decreased maintained
----------------------------------------------------------------------------------------------------------------
54........................ Professional, 48 27 18 3
Scientific and
Technical Services.
55........................ Manag6ment of 2 2 0 0
Companies and
Enterprises.
56........................ Administrative and 44 17 24 3
Support and Waste
Management and
Remediation
Services.
---------------------------------------------------------------
Total................. .................... 94 46 42 6
----------------------------------------------------------------------------------------------------------------
[[Page 72594]]
Evaluation of SBA Loan Data
Before proposing or deciding on an industry's size standard
revision, SBA also considers the impact of size standards revisions on
SBA's loan programs. Accordingly, SBA examined its internal 7(a) and
504 loan data for fiscal years 2016-2018 to assess whether the
calculated size standards in Table 4 (above) need further adjustments
to ensure credit opportunities for small businesses through those
programs. For the industries reviewed in this proposed rule, the data
shows that it is mostly businesses much smaller than the current or
proposed size standards that receive SBA's 7(a) and 504 loans. For
example, for industries covered by this proposed rule, more than 98.8%
of 7(a) and 504 loans in fiscal years 2016-2018 went to businesses
below the current or calculated size standards.
Proposed Changes to Size Standards
Based on the analytical results in Table 4 and considerations of
the impacts of calculated size standards in terms of access by
currently small businesses to SBA's loans, as discussed above, of a
total of 94 industries or subindustries (exceptions) with receipts-
based size standards in Sectors 54, 55, and 56 that are covered by this
proposed rule, and considering the current situation due to the COVID-
19 related national emergency and its impacts on small businesses and
the overall economy, SBA proposes to increase size standards for 46
industries, and retain the current size standards for the remaining 48
industries or subindustries in those sectors.
Special Considerations
On March 13, 2020, the ongoing Coronavirus Disease 2019 (COVID-19)
was declared a pandemic of enough severity and magnitude to warrant an
emergency declaration for all states, territories, and the District of
Columbia. With the COVID-19 emergency, many small businesses nationwide
are experiencing economic hardship as a direct result of the Federal,
State, and local public health measures that are being taken to
minimize the public's exposure to the virus. These measures, some of
which are government-mandated, are being implemented nationwide and
include the closures of restaurants, bars, and gyms. In addition, based
on the advice of public health officials, other measures, such as
keeping a safe distance from others or even stay-at-home orders, are
being implemented, resulting in a dramatic decrease in economic
activity as the public avoids malls, retail stores, and other
businesses.
The Coronavirus Aid, Relief, and Economic Security Act (the CARES
Act or the Act) (Pub. L. 116-136) was signed on March 27, 2020, to
provide emergency assistance and health care response for individuals,
families, and businesses affected by the coronavirus pandemic. Section
1102 of the Act temporarily permits SBA to guarantee 100% of 7(a) loans
under a new program titled the Paycheck Protection Program (PPP).
Section 1106 of the Act provides for forgiveness of up to the full
principal amount of qualifying loans guaranteed under the PPP. The PPP
and loan forgiveness are intended to provide economic relief to small
businesses nationwide adversely impacted by COVID-19. On April 24,
2020, additional funding for the CARES Act, including for the PPP, was
provided. The Paycheck Protection Program and Health Care Enhancement
Act, Public Law 116-139 (April 24, 2020).
The Agency is following closely the development of the pandemic and
the economic situation and recovery. The consequence of the initial
response of the public to the COVID-19 pandemic as well as the
different measures taken by the Government to contain it (e.g., stay at
homestay-at-home orders, social distancing, etc.) have resulted in the
present economic decline. A variety of economic indicators such as the
Gross Domestic Product (GDP) and the unemployment rate shows that this
recession is significantly worse than any other recession since World
War II. The GDP decreased nearly 5%, and the personal consumption in
goods and services decreased 6.9% in the first quarter of 2020. The
Bureau of Economic Analysis (BEA) third estimate for the second quarter
of 2020 shows that the GDP decreased 31.4%, and the personal
consumption in goods and services decreased 33.2%; In August 2020,
personal income decreased 2.7%, after having decreased by a lower
percentage in June (1.2%) and slightly increased in July 2020 (0.5%).
In September 2020, the unemployment rate declined to 7.9% from August
2020, when the unemployment rate was 8.4%. After reaching 14.7% in
April 2020, the unemployment rate has been decreasing from May to
September 2020, but still it is greater than in February 2020 when it
was 3.5%. For the month of September 2020, non-farm payroll increased
661,000 from August 2020, but the decrease in employment since February
2020 is about 10.5 million. Specifically, for the sectors evaluated in
this proposed rule, more recent data in September 2020 shows that the
unemployment rate for professional and technical services was 5.0%;
management, administrative, and waste services was 10.0%; and
administrative and support services was 10.2%. In September 2019, the
unemployment rates for these sectors were 2.5%, 4.7% and 4.9%,
respectively.\2\ The latest Federal Reserve Board's Monetary Policy
Report shows that in general the most impacted firms in these sectors
are the small businesses.\3\
---------------------------------------------------------------------------
\2\ Bureau of Labor Statistics, Table A-31, Unemployed persons
by industry, class of worker, and sex. See https://www.bls.gov/cps/cpsaat26.htm.
\3\ Board of Governors of the Federal Reserve System (June
2020), Monetary Policy Report, p. 24 (see https://www.federalreserve.gov/monetarypolicy/files/20200612_mprfullreport.pdf) and U.S. Census Bureau, see https://portal.census.gov/pulse/data. The latter is a recent survey created
by the Census Bureau to provide high-frequency, detailed information
on participation in small business-specific initiatives such as the
PPP.
---------------------------------------------------------------------------
Accordingly, in view of the above impacts on small businesses from
the COVID-19 pandemic and Federal Government efforts to provide relief
to small businesses and support to the overall economy, SBA proposes to
adopt increases to size standards for 46 industries and retain the
current size standards for 48 industries or subindustries for a vast
majority of which analytical results suggested their size standards
could be lowered.
The proposed size standards are presented in Table 6, Proposed Size
Standards Revisions. Also presented in Table 6 are current and
calculated size standards for comparison.
Table 6--Proposed Size Standards Revisions
----------------------------------------------------------------------------------------------------------------
Calculated Proposed size Current size
NAICS code NAICS industry title size standard standard ($ standard ($
($ million) million) million)
----------------------------------------------------------------------------------------------------------------
541110............................ Offices of Lawyers.......... $13.5 $13.5 $12.0
541191............................ Title Abstract and 17.0 17.0 12.0
Settlement Offices.
[[Page 72595]]
541199............................ All Other Legal Services.... 18.0 18.0 12.0
541211............................ Offices of Certified Public 23.5 23.5 22.0
Accountants.
541213............................ Tax Preparation Services.... 12.0 22.0 22.0
541214............................ Payroll Services............ 34.5 34.5 22.0
541219............................ Other Accounting Services... 17.5 22.0 22.0
541310............................ Architectural Services...... 11.0 11.0 8.0
541320............................ Landscape Architectural 6.5 8.0 8.0
Services.
541330............................ Engineering Services........ 22.5 22.5 16.5
541340............................ Drafting Services........... 7.0 8.0 8.0
541350............................ Building Inspection Services 10.0 10.0 8.0
541360............................ Geophysical Surveying and 25.0 25.0 16.5
Mapping Services.
541370............................ Surveying and Mapping 14.0 16.5 16.5
(except Geophysical)
Services.
541380............................ Testing Laboratories........ 16.5 16.5 16.5
541410............................ Interior Design Services.... 6.5 8.0 8.0
541420............................ Industrial Design Services.. 15.0 15.0 8.0
541430............................ Graphic Design Services..... 7.5 8.0 8.0
541490............................ Other Specialized Design 12.0 12.0 8.0
Services.
541511............................ Custom Computer Programming 20.5 30.0 30.0
Services.
541512............................ Computer Systems Design 27.0 30.0 30.0
Services.
541513............................ Computer Facilities 32.5 32.5 30.0
Management Services.
541519............................ Other Computer Related 21.0 30.0 30.0
Services.
541611............................ Administrative Management 21.5 21.5 16.5
and General Management
Consulting Services.
541612............................ Human Resources Consulting 25.5 25.5 16.5
Services.
541613............................ Marketing Consulting 14.5 16.5 16.5
Services.
541614............................ Process, Physical 17.5 17.5 16.5
Distribution, and Logistics
Consulting Services.
541618............................ Other Management Consulting 13.0 16.5 16.5
Services.
541620............................ Environmental Consulting 13.5 16.5 16.5
Services.
541690............................ Other Scientific and 15.5 16.5 16.5
Technical Consulting
Services.
541720............................ Research and Development in 24.5 24.5 22.0
the Social Sciences and
Humanities.
541810............................ Advertising Agencies........ 22.5 22.5 16.5
541820............................ Public Relations Agencies... 15.0 16.5 16.5
541830............................ Media Buying Agencies....... 28.5 28.5 16.5
541840............................ Media Representatives....... 18.5 18.5 16.5
541850............................ Outdoor Advertising......... 30.5 30.5 16.5
541860............................ Direct Mail Advertising..... 19.5 19.5 16.5
541870............................ Advertising Material 25.0 25.0 16.5
Distribution Services.
541890............................ Other Services Related to 16.0 16.5 16.5
Advertising.
541910............................ Marketing Research and 20.0 20.0 16.5
Public Opinion Polling.
541921............................ Photography Studios, 14.0 14.0 8.0
Portrait.
541922............................ Commercial Photography...... 8.0 8.0 8.0
541930............................ Translation and 20.0 20.0 8.0
Interpretation Services.
541940............................ Veterinary Services......... 9.0 9.0 8.0
541990............................ All Other Professional, 17.0 17.0 16.5
Scientific and Technical
Services.
551111............................ Offices of Bank Holding 34.0 34.0 22.0
Companies.
551112............................ Offices of Other Holding 40.0 40.0 22.0
Companies.
561110............................ Office Administrative 11.0 11.0 8.0
Services.
561210............................ Facilities Support Services. 32.5 41.5 41.5
561311............................ Employment Placement 21.0 30.0 30.0
Agencies.
561312............................ Executive Search Services... 12.0 30.0 30.0
561320............................ Temporary Help Services..... 26.5 30.0 30.0
561330............................ Professional Employer 36.5 36.5 30.0
Organizations.
561410............................ Document Preparation 16.5 16.5 16.5
Services.
561421............................ Telephone Answering Services 14.5 16.5 16.5
561422............................ Telemarketing Bureaus and 22.5 22.5 16.5
Other Contact Centers.
561431............................ Private Mail Centers........ 8.5 16.5 16.5
561439............................ Other Business Service 23.5 23.5 16.5
Centers (including Copy
Shops).
561440............................ Collection Agencies......... 17.0 17.0 16.5
561450............................ Credit Bureaus.............. 36.0 36.0 16.5
561491............................ Repossession Services....... 9.0 16.5 16.5
561492............................ Court Reporting and 14.0 16.5 16.5
Stenotype Services.
561499............................ All Other Business Support 19.0 19.0 16.5
Services.
561510............................ Travel Agencies............. 19.0 22.0 22.0
561520............................ Tour Operators.............. 13.5 22.0 22.0
561591............................ Convention and Visitors 13.5 22.0 22.0
Bureaus.
561599............................ All Other Travel Arrangement 28.5 28.5 22.0
and Reservation Services.
561611............................ Investigation Services...... 21.5 22.0 22.0
561612............................ Security Guards and Patrol 25.5 25.5 22.0
Services.
561613............................ Armored Car Services........ 38.0 38.0 22.0
561621............................ Security Systems Services 20.5 22.0 22.0
(except Locksmiths).
[[Page 72596]]
561622............................ Locksmiths.................. 7.0 22.0 22.0
561710............................ Exterminating and Pest 15.5 15.5 12.0
Control Services.
561720............................ Janitorial Services......... 15.0 19.5 19.5
561730............................ Landscaping Services........ 8.5 8.5 8.0
561740............................ Carpet and Upholstery 7.5 7.5 6.0
Cleaning Services.
561790............................ Other Services to Buildings 8.0 8.0 8.0
and Dwellings.
561910............................ Packaging and Labeling 17.0 17.0 12.0
Services.
561920............................ Convention and Trade Show 17.5 17.5 12.0
Organizers.
561990............................ All Other Support Services.. 14.5 14.5 12.0
562111............................ Solid Waste Collection...... 34.0 41.5 41.5
562112............................ Hazardous Waste Collection.. 31.0 41.5 41.5
562119............................ Other Waste Collection...... 25.0 41.5 41.5
562211............................ Hazardous Waste Treatment 39.0 41.5 41.5
and Disposal.
562212............................ Solid Waste Landfill........ 39.0 41.5 41.5
562213............................ Solid Waste Combustors and 41.0 41.5 41.5
Incinerators.
562219............................ Other Nonhazardous Waste 24.5 41.5 41.5
Treatment and Disposal.
562910............................ Remediation Services........ 18.5 22.0 22.0
562920............................ Materials Recovery 21.5 22.0 22.0
Facilities.
562991............................ Septic Tank and Related 8.0 8.0 8.0
Services.
562998............................ All Other Miscellaneous 14.5 14.5 8.0
Waste Management Services.
----------------------------------------------------------------------------------------------------------------
Table 7, Summary of Proposed Size Standards Revisions by Sector,
below, summarizes the proposed changes to size standards by NAICS
sector.
Table 7--Summary of Proposed Size Standards Revisions by Sector
----------------------------------------------------------------------------------------------------------------
Number of Number of Number of Number of
Sector Sector name size standards size standards size standards size standards
reviewed increased decreased maintained
----------------------------------------------------------------------------------------------------------------
54........................ Professional, 48 27 0 21
Scientific and
Technical Services.
55........................ Management of 2 2 0 0
Companies and
Enterprises.
56........................ Administrative and 44 17 0 27
Support, Waste
Management and
Remediation
Services.
---------------------------------------------------------------
Total................. .................... 94 46 0 48
----------------------------------------------------------------------------------------------------------------
Evaluation of Dominance in Field of Operation
SBA has determined that for the industries it has evaluated in this
proposed rule, no individual firm at or below the proposed size
standard would be large enough to dominate its field of operation. At
the proposed size standards levels, if adopted, the small business
share of total industry receipts among those industries would be, on
average, 0.4 percent, varying from 0.005% to 4.8%. These market shares
effectively preclude a firm at or below the proposed size standards
from exerting control on any of the industries.
Alternatives Considered
By law, SBA is required to develop numerical size standards for
establishing eligibility for Federal small business assistance programs
and to review every five years all size standards and make necessary
adjustments to reflect the current industry structure and Federal
market conditions. Other than varying the levels of size standards by
industry and changing the measures of size standards (e.g., using
annual receipts vs. the number of employees), no practical alternatives
exist to the systems of numerical size standards.
The proposal is to increase size standards where the data suggested
increases are warranted, and to retain, in response to COVID-19
emergency and resultant economic impacts on small businesses, all
current size standards where the data suggested lowering is
appropriate.
Nonetheless, SBA considered two other alternatives. Alternative
Option One was to propose changes exactly as suggested by the
analytical results. In other words, option one would entail increasing
size standards for 46 industries, decreasing them for 42 industries,
and retaining them at their current levels for 6 industries.
Alternative Option Two was to retain all current size standards.
Alternative Option One would cause a substantial number of
currently small businesses to lose their small business status and
hence to lose their access to Federal small business assistance,
especially small business set-aside contracts and SBA's financial
assistance in some cases. During the first 5-year review of size
standards, some commenters had expressed concerns about the SBA's
policy of not lowering size standards based on the analytical results.
As part of option one, SBA also considered increasing 46 size
standards as suggested by the analytical results and mitigating the
impact of the decreases to size standards by adjusting the calculated
sizes considering the impact on small business access to Federal
contracting and loans. However, in the present situation with the
global COVID-19 pandemic resulting in high levels of risk and dramatic
reductions in economic activity of unprecedented nature, SBA presents
the impacts of adopting the analytical results without
[[Page 72597]]
adjustment in Alternative Option One and proposes to retain all size
standards for which the evaluation of principal factors suggested
reductions, and to adopt only the increases suggested by the
evaluation. SBA will adopt this approach temporarily and may reevaluate
this approach as the economic situation evolves.
Under option two, given the current COVID-19 pandemic, SBA
considered retaining the current level of all size standards even
though the current analysis may suggest changing them. SBA considers
that the option of retaining all size standards at this moment provides
the opportunity to reassess the economic situation once the economic
recovery starts. Under this option, as the current situation develops,
SBA will be able to assess new data available on economic indicators,
federal procurement, and SBA loans before adopting changes to size
standards. However, SBA is not adopting option two because the
Regulatory Impact Analysis shows that retaining all size standards at
their current levels is more onerous for the small businesses than the
option of adopting 46 increases and retaining 48 size standards. SBA
may reevaluate this approach as the current economic situation evolves.
Request for Comments
SBA invites public comments on this proposed rule, especially on
the following issues:
1. SBA seeks feedback on whether SBA's proposal to increase 46 size
standards and retain 48 size standards is appropriate given the results
from the latest available industry and Federal contracting data of each
industry and subindustry (exception) reviewed in this proposed rule,
along with ongoing uncertainty and dramatic contraction in economic
activity due to the global COVID-19 pandemic. SBA also seeks
suggestions, along with supporting facts and analysis, for alternative
standards, if they would be more appropriate than the proposed size
standards.
2. SBA also seeks comments on whether SBA should not lower any size
standards in view of the COVID-19 pandemic and its adverse impacts on
small businesses as well as on the overall economic situation when
analytical results suggest some size standards could be lowered. SBA
believes that lowering size standards under the current economic
environment would run counter to what Congress and the Federal
Government are doing to aid and provide relief to the nation's small
businesses impacted by the COVID-19 pandemic.
3. Given the uncertainty produced by the global COVID-19 pandemic
and the economic consequences, SBA would like to receive comments from
the public on the possibility of lowering size standards while
mitigating the consequences of the lower standards, instead of not
lowering any size standards at all.
4. In calculating the overall industry size standard, SBA has
assigned equal weight to each of the five primary factors in all
industries and subindustries covered by this proposed rule. SBA seeks
feedback on whether it should assign equal weight to each factor or on
whether it should give more weight to one or more factors for certain
industries or subindustries. Recommendations to weigh some factors
differently than others should include suggested weights for each
factor along with supporting facts and analysis.
5. Finally, SBA seeks comments on data sources it used to examine
industry and Federal market conditions, as well as suggestions on
relevant alternative data sources that the Agency should evaluate in
reviewing or modifying size standards for industries covered by this
proposed rule.
Public comments on the above issues are very valuable to SBA for
validating its proposed size standards revisions in this proposed rule.
Commenters addressing size standards for a specific industry or a group
of industries should include relevant data and/or other information
supporting their comments. If comments relate to the application of
size standards for Federal procurement programs, SBA suggests that
commenters provide information on the size of contracts in their
industries, the size of businesses that can undertake the contracts,
start-up costs, equipment and other asset requirements, the amount of
subcontracting, other direct and indirect costs associated with the
contracts, the use of mandatory sources of supply for products and
services, and the degree to which contractors can mark up those costs.
Compliance With Executive Orders 12866 and 13771, the Regulatory
Flexibility Act (5 U.S.C. 601-612), Executive Orders 13563, 12988, and
13132, and the Paperwork Reduction Act (44 U.S.C. Ch. 35)
Executive Order 12866
The Office of Management and Budget (OMB) has determined that this
proposed rule is a significant regulatory action for purposes of
Executive Order 12866. Accordingly, in the next section SBA provides a
Regulatory Impact Analysis of this proposed rule, including (1) a
statement of the need for the proposed action, (2) an examination of
alternative approaches, and (3) an evaluation of the benefits and
costs--both quantitative and qualitative--of the proposed action and
the alternatives considered. However, this proposed rule is not a
``major rule'' under the Congressional Review Act, 5 U.S.C. 800.
Regulatory Impact Analysis
1. What is the need for this regulatory action?
Under the Small Business Act (Act) (15 U.S.C. 632(a)), SBA's
Administrator is responsible for establishing small business size
definitions (or ``size standards'') and ensuring that such definitions
vary from industry to industry to reflect differences among various
industries. The Jobs Act requires SBA to review every 5 years all size
standards and make necessary adjustments to reflect current industry
and Federal market conditions. This proposed rule is part of the second
5-year review of size standards in accordance with the Jobs Act. The
first 5-year review of size standards was completed in early 2016. Such
periodic reviews of size standards provide SBA with an opportunity to
incorporate ongoing changes to industry structure and Federal market
environment into size standards and to evaluate the impacts of prior
revisions to size standards on small businesses. This also provides SBA
with an opportunity to seek and incorporate public input to the size
standards review and analysis. SBA believes that proposed size
standards revisions for industries being reviewed in this proposed rule
will make size standards more reflective of the current economic
characteristics of businesses in those industries and the latest trends
in Federal marketplace.
SBA's mission is to aid and assist small businesses through a
variety of financial, procurement, business development and counseling,
and disaster assistance programs. To determine the actual intended
beneficiaries of these programs, SBA establishes numerical size
standards by industry to identify businesses that are deemed small.
The proposed revisions to the existing size standards for 94
industries or subindustries in NAICS Sectors 54, 55, 56 are consistent
with SBA's statutory mandates to help small businesses grow and create
jobs and to review and adjust size standards every five years. This
regulatory action promotes the Administration's goals and objectives as
well as meets the SBA's statutory
[[Page 72598]]
responsibility. One of SBA's goals in support of promoting the
Administration's objectives is to help small businesses succeed through
fair and equitable access to capital and credit, Federal Government
contracts and purchases, and management and technical assistance.
Reviewing and modifying size standards, when appropriate, ensures that
intended beneficiaries are able to access Federal small business
programs that are designed to assist them to become competitive and
create jobs.
2. What are the potential benefits and costs of this regulatory action?
OMB directs agencies to establish an appropriate baseline to
evaluate any benefits, costs, or transfer impacts of regulatory actions
and alternative approaches considered. The baseline should represent
the agency's best assessment of what the world would look like absent
the regulatory action. For a new regulatory action promulgating
modifications to an existing regulation (such as modifying the existing
size standards), a baseline assuming no change to the regulation (i.e.,
making no changes to current size standards) generally provides an
appropriate benchmark for evaluating benefits, costs, or transfer
impacts of proposed regulatory changes and their alternatives.
Proposed Changes to Size Standards
Based on the results from analyses of latest industry and Federal
contracting data, as well as consideration of the impact of size
standards changes on small businesses and significant adverse impacts
of the COVID-19 emergency on small businesses and the overall economic
activity, of the total of 94 industries in Sectors 54, 55, and 56 that
have receipts-based size standards, SBA proposes to increase size
standards for 46 industries and maintain current size standards for the
remaining 48 industries (including exceptions).
The Baseline
For purposes of this regulatory action, the baseline represents
maintaining the ``status quo,'' i.e., making no changes to the current
size standards. Using the number of small businesses and levels of
benefits (such as set-aside contracts, SBA's loans, disaster
assistance, etc.) they receive under the current size standards as a
baseline, one can examine the potential benefits, costs and transfer
impacts of proposed changes to size standards on small businesses and
on the overall economy.
Based on the 2012 Economic Census (the latest available), of a
total of about 1,096,800 businesses in industries in Sectors 54, 55,
and 56, 97.9% are considered small under the current size standards.
That percentage varies from 65.3 percent% in Sector 55 to 98.4 percent%
in Sector 54. Based on the data from FPDS-NG for fiscal years 2016-
2018, about 39,844 unique firms in those industries received at least
one Federal contract during that period, of which 82.8 percent% were
small under the current size standards. A total of $134.1 billion in
average annual contract dollars were awarded to businesses in those
industries during the period of evaluation, and 32.8% of the dollars
awarded went to small businesses. For these sectors, providing contract
dollars to small business through set-asides is quite important. From
the total small business contract dollars awarded during the period
considered, 71.2% were awarded through various small business set-aside
programs and 28.8% were awarded through non-set set-aside contracts.
Based on the SBA's internal data on its loan programs for fiscal years
2016-2018, small businesses in those industries received, on an annual
basis, a total of 9,664 7(a) and 504 loans in that period, totaling
about $2.9 billion, of which 86.3% was issued through the 7(a) program
and 13.7% was issued through the 504/CDC program. During fiscal years
2016-2018, small businesses in those industries also received 585 loans
through the SBA's Economic Injury Disaster Loan (EIDL) program,
totaling about $36.2 million on an annual basis. Table 8, Baseline for
All Industries, below, provides these baseline results by sector.
Table 8--Baseline for All Industries
----------------------------------------------------------------------------------------------------------------
Sector 54 Sector 55 Sector 56 Total
----------------------------------------------------------------------------------------------------------------
Baseline All Industries (current size standards) 48 2 44 94
Total firms (Economic Census)................... 760,701 7,544 328,522 1,096,767
Total small firms under current size standards 748,170 4,926 320,672 1,073,769
(Economic Census)..............................
Small firms as % of total firms................. 98.3 65.3 97.6 97.9
Total contract dollars ($ million) (FPDS-NG $96,050.0 $0.18 $38,089.1 $134,139.3
FY2016-2018)...................................
Total small business contract dollars under $34,208.0 $0.0 $9,816.8 $44,025.0
current standards ($ million) (FPDS-NG FY2016-
2018)..........................................
Small business dollars as % of total dollars 35.6% 0.6% 25.8% 32.8%
(FPDS-NG FY2016-2018)..........................
Total No. of unique firms getting contracts 26,673 3 15,709 39,844
(FPDS-NG FY2016-2018)..........................
Total No. of unique small firms getting small 21,318 1 13,349 32,996
business contracts (FPDS-NG FY2016-2018).......
Small business firms as % of total firms........ 79.9% 33.3% 85.0% 82.8%
No. of 7(a) and 504/CDC loans (FY 2016-2018).... 6,415 64 3,185 9,664
Amount of 7(a) and 504 loans ($ million) (FY $2,056.8 $41.9 $796.0 $2,894.7
2016-2018).....................................
No. of EIDL loans (FY 2016-2018)................ 406 1 178 585
Amount of EIDL loans ($ million) (FY 2016-2018). $25.2 $0.0 $11.0 $36.2
----------------------------------------------------------------------------------------------------------------
Increases to Size Standards
As stated above, of 94 receipts-based size standards in Sectors 54,
55, and 56 that are reviewed in this proposed rule, based on the
results from analyses of latest industry and Federal market data as
well as impacts of size standards changes on small businesses, SBA
proposes to increase 46 size standards. Below are descriptions of the
benefits, costs and transfer impacts of these proposed increases to
size standards.
Benefits of Increases to Size Standards
The most significant benefit to businesses from proposed increases
to size standards is gaining eligibility for Federal small business
assistance programs or retaining that eligibility for a longer period.
These include SBA's business loan programs, EIDL program, and Federal
procurement programs intended for small businesses. Federal procurement
programs provide targeted, set-aside opportunities for small businesses
under SBA's various
[[Page 72599]]
business development and contracting programs. These include the 8(a)/
BD (Business Development) Program, the Small Disadvantaged Businesses
(SDB) Program, the Historically Underutilized Business Zones (HUBZone)
Program, the Women-Owned Small Businesses (WOSB) Program, the
Economically Disadvantaged Women-Owned Small Businesses (EDWOSB)
Program, and the Service-Disabled Veteran-Owned Small Businesses
(SDVOSB) Program.
Besides set-aside contracting and financial assistance discussed
above, small businesses also benefit through reduced fees, less
paperwork, and fewer compliance requirements that are available to
small businesses through the Federal Government. However, SBA has no
data to estimate the number of small businesses receiving such
benefits.
Based on the 2012 Economic Census (latest available), SBA estimates
that in 46 industries in NAICS Sectors 54, 55, and 56 for which it has
proposed to increase size standards, about 2,600 firms (see Table 9,
below), not small under the current size standards, will become small
under the proposed size standards increases and therefore become
eligible for these programs. That represents about 0.4% of all firms
classified as small under the current size standards in industries for
which SBA has proposed increasing size standards. If adopted, proposed
size standards would result in an increase to the small business share
of total receipts in those industries from 34.7% to 37.0%.
With more businesses qualifying as small under the proposed
increases to size standards, Federal agencies will have a larger pool
of small businesses from which to draw for their small business
procurement programs. Growing small businesses that are close to
exceeding the current size standards will be able to retain their small
business status for a longer period under the higher size standards,
thereby enabling them to continue to benefit from the small business
programs.
Based on the FPDS-NG data for fiscal years 2016-2018, SBA estimates
that about 464 firms that are active in Federal contracting in those
industries would gain small business status under the proposed size
standards. Based on the same data, SBA estimates that those newly-
qualified small businesses under the proposed increases to size
standards, if adopted, could receive Federal small business contracts
totaling about $752.6 million annually. That represents a 4.0% increase
to small business dollars from the sector baseline.
The added competition from more businesses qualifying as small can
result in lower prices to the Government for procurements set-aside or
reserved for small businesses, but SBA cannot quantify this impact.
Costs could be higher when full and open contracts are awarded to
HUBZone businesses that receive price evaluation preferences. However,
with agencies likely setting aside more contracts for small businesses
in response to the availability of a larger pool of small businesses
under the proposed increases to size standards, HUBZone firms might
actually end up getting more set-aside contracts and fewer full and
open contracts, thereby resulting in some cost savings to agencies.
While SBA cannot estimate such costs savings as it is impossible to
determine the number and value of unrestricted contracts to be
otherwise awarded to HUBZone firms will be awarded as set-asides, such
cost savings are likely to be relatively small as only a small fraction
of full and open contracts are awarded to HUBZone businesses.
Under SBA's 7(a) and 504 loan programs, based on the data for
fiscal years 2016-2018, SBA estimates up to about 26 SBA 7(a) and 504
loans totaling about $10.6 million could be made to these newly-
qualified small businesses in those industries under the proposed size
standards. That represents a 0.4% increase to the loan amount compared
to the Group baseline.
Newly-qualified small businesses will also benefit from the SBA's
EIDL program. Since the benefit provided through this program is
contingent on the occurrence and severity of a disaster in the future,
SBA cannot make a meaningful estimate of this impact. However, based on
the historical trends of the EIDL data, SBA estimates that, on an
annual basis, the newly-defined small businesses under the proposed
increases to size standards, if adopted, could receive three (3) EIDL
loans, totaling about $0.15 million. Additionally, the newly-defined
small businesses would also benefit through reduced fees, less
paperwork, and fewer compliance requirements that are available to
small businesses through the Federal Government, but SBA has no data to
quantify this impact. Table 9, Impacts of Proposed Increases to Size
Standards, provides these results by NAICS sector.
Table 9--Impacts of Proposed Increases to Size Standards
----------------------------------------------------------------------------------------------------------------
Sector 54 Sector 55 Sector 56 Total
----------------------------------------------------------------------------------------------------------------
No. of industries with proposed increases to 27 2 17 46
size standards.................................
Total current small businesses in industries 462,890 4,926 176,504 644,321
with Proposed increases to size standards
(Economic Census 2012).........................
Additional firms qualifying as small under 1,345 527 710 2,582
proposed standards (2012 Economic Census)......
Percentage of additional firms qualifying as 0.3% 10.7% 0.4% 0.4%
small relative to current small businesses in
industries with proposed increases to size
standards......................................
No. of current unique small firms getting small 13,151 1 4,180 16,732
business contracts in industries with proposed
increases to size standards (FPDS-NG FY2016-
2018) \1\......................................
Additional small business firms getting small 412 0 99 464
business status (FPDS-NG FY2016-2018)..........
% increase to small businesses relative to 3.1% 0% 2.4% 2.8%
current unique small firms getting small
business contracts in industries with proposed
increases to size standards (FPDS-NG FY2016-
2018) \1\......................................
Total small business contract dollars under 16,182.3 0.0 2,851.0 19,033.0
current standards in industries with proposed
increases to size standards ($ million) (FPDS-
NG FY2016-2018)................................
Estimated small business dollars available to 651.4 0.0 101.2 752.6
newly-qualified small firms (Using avg dollars
obligated to SBs) ($ million) FPDS-NG FY 2016-
2018) \2\......................................
[[Page 72600]]
% increase to small business dollars relative to 4.0% 0.0 3.5% 4.0%
total small business contract dollars under
current standards in industries with proposed
increases to size standards....................
Total no. of 7(a) and 504 loans to small 3,795 64 1,680 5,539
business in industries with proposed increases
to size standards (FY 2016-2018)...............
Total amount of 7(a) and 504 loans to small $1,402.3 $41.9 $390.7 $1,834.9
businesses in industries with proposed
increases to size standards ($ million) (FY
2016-2018).....................................
Estimated no. of 7(a) and 504 loans to newly- 12 7 7 26
qualified small firms..........................
Estimated 7(a) and 504 loan amount to newly- $4.4 $4.6 $1.6 $10.6
qualified small firms ($ million)..............
% increase to 7(a) and 504 loan amount relative 0.2% 10.9% 0.4% 0.6%
to the total amount of 7(a) and 504 loans in
industries with proposed increases to size
standards......................................
Total no. of EIDL loans to small businesses in 247 1 92 340
industries with proposed increases to size
standards (FY 2016-2018).......................
Total amount of EIDL loans to small businesses $17.0 $0.0 $5.3 $22.3
in industries with proposed increases to size
standards ($ million) (FY 2016-2018)...........
Estimated no. of EIDL loans to newly-qualified 1 1 1 3
small firms....................................
Estimated EIDL loan amount to newly-qualified $0.07 $0.02 $0.06 0.15
small firms ($ million)........................
% increase to EIDL loan amount relative to the 0.4% 100.0% 1.1% 0.7%
total amount of EIDL loans in industries with
proposed increases to size standards...........
----------------------------------------------------------------------------------------------------------------
\1\ Total impact represents total unique number of firms impacted to avoid double counting as some firms are
participating in more than one industry.
\2\ Additional dollars are calculated multiplying average small business dollars obligated per DUNS times change
in number of firms. Numbers of firms are calculated using the SBA current size standard, not the contracting
officer's size designation.
Costs of Increases to Size Standards
Besides having to register in SAM to be able to participate in
Federal contracting and update the SAM profile annually, small
businesses incur no direct costs to gain or retain their small business
status as a result of increases to size standards. All businesses
willing to do business with the Federal Government must register in SAM
and update their SAM profiles annually, regardless of their size
status. SBA believes that a vast majority of businesses that are
willing to participate in Federal contracting are already registered in
SAM and update their SAM profiles annually. More importantly, this
proposed rule does not establish the new size standards for the very
first time; rather it intends to modify the existing size standards in
accordance with a statutory requirement and the latest data and other
relevant factors.
To the extent that the newly-qualified small businesses could
become active in Federal procurement, the proposed increases to size
standards, if adopted, may entail some additional administrative costs
to the Government as a result of more businesses qualifying as small
for Federal small business programs. For example, there will be more
firms seeking SBA's loans, more firms eligible for enrollment in the
Dynamic Small Business Search (DSBS) database or in certify.sba.gov,
more firms seeking certification as 8(a)/BD or HUBZone firms or
qualifying for small business, SDB, WOSB, EDWOSB, and SDVOSB status,
and more firms applying for SBA's 8(a)/BD and all small business
mentor-prot[eacute]g[eacute] programs. With an expanded pool of small
businesses, it is likely that Federal agencies would set-aside more
contracts for small businesses under the proposed increases to size
standards. One may surmise that this might result in a higher number of
small business size protests and additional processing costs to
agencies. However, the SBA's historical data on size protests shows
that the number of size protests decreased following the increases to
receipts-based size standards as part of the first 5-year review of
size standards. Specifically, on an annual basis, the number of size
protests fell from about 600 during fiscal years 2011-2013 (review of
most receipts-based size standards was completed by the end of FY
2013), as compared to about 500 during fiscal years 2014-2016 when size
standards increases were in effect. That represents a 17% decline.
Among those newly-defined small businesses seeking SBA's loans, there
could be some additional costs associated with verification of their
small business status. However, small business lenders have an option
of using the tangible net worth and net income-based alternative size
standard instead of using the industry-based size standards to
establish eligibility for SBA's loans. For these reasons, SBA believes
that these added administrative costs will be minor because necessary
mechanisms are already in place to handle these added requirements.
Additionally, some Federal contracts may possibly have higher
costs. With a greater number of businesses defined as small due to the
proposed increases to size standards, Federal agencies may choose to
set-aside more contracts for competition among small businesses only
instead of using a full and open competition. The movement of contracts
from unrestricted competition to small business set-aside contracts
might result in competition among fewer total bidders, although there
will be more small businesses eligible to submit offers under the
proposed size standards. However, the additional costs associated with
fewer bidders are expected to be minor since, by law, procurements may
be set-aside for small businesses under the 8(a)/BD, SDB, HUBZone,
WOSB, EDWOSB, or SDVOSB programs only if awards are expected to be made
at fair and reasonable prices.
Costs may also be higher when full and open contracts are awarded
to HUBZone businesses that receive price evaluation preferences.
However, with agencies likely setting aside more contracts for small
businesses in response to the availability of a larger pool of small
businesses under the proposed increases to size standards, HUBZone
firms might actually end up getting fewer full and open contracts,
thereby resulting in some cost savings to agencies. However, such cost
savings are likely to be minimal as only a small fraction of
unrestricted contracts are awarded to HUBZone businesses.
[[Page 72601]]
Transfer Impacts of Increases to Size Standards
The proposed increases to size standards, if adopted, may result in
some redistribution of Federal contracts between the newly-qualified
small businesses and large businesses and between the newly-qualified
small businesses and small businesses under the current standards.
However, it would have no impact on the overall economic activity since
total Federal contract dollars available for businesses to compete for
will not change with changes to size standards. While SBA cannot
quantify with certainty the actual outcome of the gains and losses from
the redistribution contracts among different groups of businesses, it
can identify several probable impacts in qualitative terms. With the
availability of a larger pool of small businesses under the proposed
increases to size standards, some unrestricted Federal contracts that
would otherwise be awarded to large businesses may be set-aside for
small businesses. As a result, large businesses may lose some Federal
contracting opportunities. Similarly, some small businesses under the
current size standards may obtain fewer set-aside contracts due to the
increased competition from larger businesses qualifying as small under
the proposed increases to size standards. This impact may be offset by
a greater number of procurements being set-aside for all small
businesses. With larger businesses qualifying as small under the higher
size standards, smaller small businesses could face some disadvantage
in competing for set-aside contracts against their larger counterparts.
However, SBA cannot quantify these impacts.
3. What alternatives have been considered?
Under OMB Circular A-4, SBA is required to consider regulatory
alternatives to the proposed changes in the proposed rule. In this
section, SBA describes and analyzes two such alternatives to the
proposed rule. Alternative Option One to the proposed rule, a more
stringent alternative to the proposed rule, would propose adopting size
standards based solely on the analytical results. In other words, the
size standards of 46 industries for which the analytical results
suggest raising size standards would be raised. However, the size
standards of 42 industries or subindustries for which the analytical
results suggest lowering size standards would be lowered. For the 6
remaining industries or subindustries, size standards would be
maintained at their current levels. Alternative Option Two would
propose retaining all size standards for all industries, given the
uncertainty generated by the ongoing COVID-19 pandemic. Below, SBA
discusses and presents the net impacts of each option.
Alternative Option One: Consider Adopting All Calculated Size Standards
As discussed at the beginning of this section in this proposed
rule, Alternative Option One would cause a substantial number of
currently small businesses to lose their small business status and
hence to lose their access to Federal small business assistance,
especially small business set-aside contracts and SBA's financial
assistance in some cases. These consequences could be mitigated. For
example, in response to the 2008 Financial Crisis and economic
conditions that followed, SBA adopted a general policy in the first 5-
year comprehensive size standards review to not lower any size standard
(except to exclude one or more dominant firms) even when the analytical
results suggested the size standard should be lowered. Currently,
because of the economic challenges presented by the COVID-19 pandemic
and the measures taken to protect public health, SBA has decided to
propose the same general policy of not lowering size standards in the
ongoing second 5-year comprehensive size standards review as well.
The primary benefit of adopting this alternative is that SBA's
procurement, management, technical and financial assistance resources
would be targeted to the most appropriate beneficiaries of such
programs according to the analytical results. Adopting the size
standards suggested by the analytical results would also promote
consistency with analytical results in SBA's exercise of its authority
to determine size standards. SBA seeks public comment on the impact of
adopting the size standard as suggested by the analytical results.
As explained in the Size Standards Methodology White Paper, in
addition to adopting all results of the primary analysis, SBA evaluates
other relevant factors as needed such as the impact of the reductions
or increases of size standards on the distribution of contracts awarded
to small businesses, and may adopt different results with the intention
of mitigating potential negative impacts.
We have discussed already the benefits and costs of increasing 46
size standards. Below we discuss the benefits and costs of decreasing
42 size standards.
Benefits of Decreases to Size Standards
The most significant benefit to businesses from decreases to size
standards when SBA's analysis suggests such decreases is to ensure that
size standards are more reflective of latest industry structure and
Federal market trends and that Federal small business assistance is
more effectively targeted to its intended beneficiaries. These include
SBA's loan programs, EIDL program, and Federal procurement programs
intended for small businesses. Federal procurement programs provide
targeted, set-aside opportunities for small businesses under SBA's
business development programs, such as small business, 8(a)/BD,
HUBZone, WOSB, EDWOSB, and SDVOSB programs. The adoption of smaller
size standards when the results support them diminishes the risk of
awarding contracts to firms that are not small anymore.
Decreasing size standards may reduce the administrative costs of
the Government, because the risk of awarding contracts to other than
small businesses may diminish when the size standards reflect better
the structure of the market. The risks of providing SBA's loans to
firms that are not needing them the most, or allowing firms that are
not eligible for small business set-asides or to participate on the SBA
procurement programs will provide for a better chance for smaller firms
to grow and benefit from the opportunities available on the Federal
market, and strengthen the small business industrial base for the
Federal Government.
Costs of Decreases to Size Standards
With fewer businesses qualifying as small under the decreases to
size standards, Federal agencies will have a smaller pool of small
businesses from which to draw for their small business procurement
programs. For example, in Option One, during fiscal years 2016-2018,
agencies awarded, on an annual basis, about $24,762 million in small
business contracts in those 42 industries for which this Option
considered decreasing size standards. Table 10, Impacts of Decreases to
Size Standards Under Alternative Option Option One, below shows that
lowering size standards in 42 industries and subindustries would reduce
Federal contract dollars awarded to small businesses by $1,027 million
or about 4.1 percent % relative to the baseline level. Because of the
importance of these sectors for the Federal procurement, SBA may adopt
mitigating measures to reduce the negative impact under the assumptions
of Option One. SBA could adopt one or more of the
[[Page 72602]]
following three actions: 1. To accept decreases in size standards as
suggested by the analytical results, 2. to decrease size standards by a
smaller amount than the calculated threshold, and 3. to retain the size
standards at their current levels.
Nevertheless, since Federal agencies are still required to meet the
statutory small business contracting goal of 23 percent %, actual
impacts on the overall set-aside activity is likely to be smaller as
agencies are likely to award more set-aside contracts to small
businesses that continue to remain small under the reduced size
standards.
With fewer businesses qualifying as small, the decreased
competition can also result in higher prices to the Government for
procurements set-aside or reserved for small businesses, but SBA cannot
quantify this impact. However, SBA estimates an almost null impact or
non-significant reduction in dollars obligated to small businesses, if
mitigation measures are adopted. Decreases to size standards would have
a very minor impact on small businesses applying for SBA's 7(a) and 504
loans because a vast majority of such loans are issued to businesses
that are far below the reduced size standards. For example, based on
the loan data for fiscal years 2016-2018, SBA estimates that about 11
of SBA's 7(a) and 504 loans with total amounts of $2.8 million could
not be made to those small businesses that would lose eligibility under
the reduced size standards (before mitigation). That represents about
0.3% decrease of the loan amounts compared to the baseline. Table 10,
below, shows these results by sector. However, the actual impact could
be much less as businesses losing small business eligibility under the
decreases to industry-based size standards could still qualify for
SBA's loans under the tangible net worth and net income-based
alternative size standard.
Businesses losing small business status would also be impacted in
terms of access to loans through the SBA's EIDL program. However, SBA
expects such impact to be minimal as only a small number of businesses
in those industries received such loans during fiscal years 2016-2018.
Additionally, all those businesses were below the reduced size
standards. 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.
Small businesses becoming other than small if size standards were
decreased might lose benefits through reduced fees, less paperwork, and
fewer compliance requirements that are available to small businesses
through the Federal Government, but SBA has no data to quantify this
impact. However, if agencies determine that SBA's size standards do not
adequately serve such purposes, they can establish a different size
standard with an approval from SBA if they are required to use SBA's
size standards for their programs.
Table 10--Impacts of Decreases to Size Standards Under Alternative Option One
----------------------------------------------------------------------------------------------------------------
Sector 54 Sector 55 Sector 56 Total
----------------------------------------------------------------------------------------------------------------
No. of industries for which SBA considered 18 0 24 42
decreasing size standards (2012 Economic
Census)........................................
Total current small businesses in industries for 276,751 0 125,106 401,857
which SBA considered decreasing size standards
(EC 2012)......................................
Estimated no. of firms losing small status for 676 0 375 1,051
which SBA considered decreasing size standards
(2012 Economic Census).........................
% of Firms losing small status relative to 0.2% 0 0.3% 0.3%
current small businesses in industries for
which SBA considered decreasing size standards.
No. of current unique small firms getting small 10,016 0 8,885 18,280
business contracts in industries for which SBA
considered decreasing size standards (FPDS-NG
FY 2016-2018) \1\..............................
Estimated number of small business firms that 291 0 145 397
would have lost small business status in the
decreases that SBA considered..................
% decrease to small business firms relative to 2.9% 0 1.6% 2.2%
current unique small firms getting small
business contracts in industries for which SBA
considered decreasing size standards (FPDS-NG
FY 2016-2018) \1\..............................
Total small business contract dollars under $17,914.2 0 $6,847.8 $24,762.0
current size standards in industries for which
SBA considered decreasing size standards ($
million) (FPDS-NG FY 2016-2018)................
Estimated small business dollars not available $824.7 0 $201.8 $1,026.6
to firms losing small business status (Using
avg dollars obligated to SBs) ($ million) \ 2\
(FPDS-NG FY 2016-2018).........................
% decrease to small business dollars relative to 4.6% 0 2.9% 4.1%
total small business contract dollars under
current size standards in industries for which
SBA considered decreasing size standards.......
Total no. of 7(a) and 504 loans to small 2,519 0 1,230 3,749
businesses in industries for which SBA
considered decreasing size standards (FY 2016-
2018)..........................................
Total amount of 7(a) and 504 loans to small $617.4 0 $335.2 $952.6
businesses in industries for which SBA
considered decreasing size standards ($
million) (FY 2016-2018)........................
Estimated no. of 7(a) and 504 loans not -7 0 -4 -11
available to firms that would have lost small
business status................................
Estimated 7(a) and 504 loan amount not available -$1.7 .............. -$1.1 -$2.8
to firms that would have lost small status ($
million).......................................
% decrease to 7(a) and 504 loan amount relative -0.3% 0 -0.3% -0.3%
to the total amount of 7(a) and 504 loans in
industries for which SBA considered decreasing
size standards.................................
Total no. of EIDL loans to small businesses in 151 0 71 222
industries for which SBA considered decreasing
size standards (FY 2016-2018)..................
Total amount of EIDL loans to small businesses $7.4 0 $4.8 $12.3
in industries for which SBA considered
decreasing size standards ($ million) (FY 2016-
2018)..........................................
[[Page 72603]]
Estimated no. of EIDL loans not available to -1 0 -1 -2
firms that would have lost small business
status.........................................
Estimated EIDL loan amount not available to -$0.05 0 -$0.07 -$0.12
firms that would have lost small business
status ($ million).............................
% decrease to EIDL loan amount relative to the -0.7% 0 -1.4% -1.0%
baseline.......................................
----------------------------------------------------------------------------------------------------------------
\1\ Total impact represents total unique industries impacted to avoid double counting as some industries have
large firms gaining small business status and small firms extending small business status.
\2\ Additional dollars are calculated multiplying average small business dollars obligated per DUNS times change
in number of firms.
Transfer Impacts of Decreases to Size Standards
If the size standards were decreased under Alternative Option One,
it may result in a redistribution of Federal contracts between small
businesses losing their small business status and large businesses and
between small businesses losing their small business status and small
businesses remaining small under the reduced size standards. However,
as under the proposed increases to size standards, it would have no
impact on the overall economic activity since the total Federal
contract dollars available for businesses to compete for will stay the
same. While SBA cannot estimate with certainty the actual outcome of
the gains and losses among different groups of businesses from contract
redistribution resulting from decreases to size standards, it can
identify several probable impacts. With a smaller pool of small
businesses under the decreases to size standards, some set-aside
Federal contracts to be otherwise awarded to small businesses may be
competed on an unrestricted basis. As a result, large businesses may
have more Federal contracting opportunities. However, because agencies
are still required by law to award 23% of dollars to small businesses,
SBA expects the movement of set-aside contracts to unrestricted
competition to be limited. For the same reason, small businesses
remaining small under the reduced size standards are likely to obtain
more set-aside contracts due to the reduced competition from fewer
businesses qualifying as small under the decreases to size standards.
With some larger small businesses losing small business status under
the decreases to size standards, smaller small businesses would likely
become more competitive in obtaining set-aside contracts. However, SBA
cannot quantify these impacts.
Net Impact of Alternative Option One
To estimate the net impacts of Alternative Option One, SBA followed
the same methodology used to evaluate the impacts of the proposed size
standards (see Table 9 above). However, under Alternative Option One,
SBA used the calculated size standards instead of the proposed ones to
determine the impacts of changes to current thresholds. The impact of
the increases of size standards were already shown in Table 9 above.
Table 10 (above) and Table 11, Net Impacts of Size Standards Changes
under Alternative Option One, below, present the impact of the
decreases of size standards and the net impact of adopting the
calculated results under Alternative Option One, respectively.
Based on the 2012 Economic Census, SBA estimates that in 88
industries in NAICS Sectors 54, 55, and 56 for which the analytical
results suggested to change size standards, about 1,530 firms (see
Table 11, below), would become small under the Option One. That
represents about 0.1% of all firms classified as small under the
current size standards.
Based on the FPDS-NG data for fiscal years 2016-2018, SBA estimates
that about 67 active firms in Federal contracting in those industries
would lose small business status under Alternative Option One, most of
them from Sector 56. This represents a decrease of about 0.2% of the
total number of small businesses participating in Federal contracting
under the current size standards. Based on the same data, SBA estimates
that about $274.0 million of Federal procurement dollars would not be
available to firms losing their small status. This represents a
decrease of 0.6% from the Group's baseline. A large amount of the
losses are accounted for by Sector 54.
Based on the SBA's loan data for fiscal years 2016-2018, the total
number of 7(a) and 504 loans may increase by about 15 loans, and the
loan amounts by about $7.8 million. This represents a 0.3% increase of
the loan amounts relative to the Group baseline.
Firms' participation under the SBA's EIDL program will be affected
as well. Since the benefit provided through this program is contingent
on the occurrence and severity of a disaster in the future, SBA cannot
make a meaningful estimate of this impact. However, based on the
historical trends of the EIDL data, SBA estimates that the total number
of EIDL loans may increase by about 1 loan, and the loan amount by
about $.03 million. This represents a 0.1% increase of the loan amounts
relative to the Group baseline. Table 11, below, provides these results
by NAICS sector.
Table 11--Net Impacts of Size Standards Changes Under Alternative Option One
----------------------------------------------------------------------------------------------------------------
Sector 54 Sector 55 Sector 56 Total
----------------------------------------------------------------------------------------------------------------
No. of industries with proposed changes to size 45 2 41 88
standards......................................
Total no. of small business under the current 739,641 4,926 301,609 1,046,177
size standards (2012 Economic Census)..........
Additional firms qualifying as small under 670 527 334 1,531
proposed size standards (2012 Economic Census).
% of additional firms qualifying as small 0.1% 10.7% 0.1% 0.1%
relative to total current small businesses.....
No. of current unique small firms getting small 20,601 1 12,384 31,395
business contracts (FPDS-NG FY 2016-2018) \1\..
[[Page 72604]]
Additional small firms getting small business 48 0 -75 -67
status (FPDS-NG FY 2016-2018)..................
% increase to small firms relative to current 0.2% 0.0% -0.6% -0.2%
unique small firms getting small business
contracts (FPDS-NG FY 2016-2018) \1\...........
Total small business small business contract 34,096.4 0.0 9,700 43,795
dollars under current size standards ($
million) (FPDS-NG FY 2016-2018)................
Estimated small business dollars available to -173.3 0 -101 -274.0
newly-qualified small firms ($ million) FPDS-NG
FY 2016-2018) \2\..............................
% increase to dollars relative to total small -0.5% 0.0% -1.0% -0.6%
business contract dollars under current size
standards......................................
Total no. of 7(a) and 504 loans to small 6,415 64 3,185 9,664
businesses (FY 2016-2018)......................
Total amount of 7(a) and 504 loans to small $2,056.8 $41.9 $796.0 $2,894.7
businesses (FY 2016-2018)......................
Estimated no. of additional 7(a) and 504 loans 5 7 3 15
to newly-qualified small firms.................
Estimated additional 7(a) and 504 loan amount to $2.7 $4.6 $0.5 $7.8
newly-qualified small firms ($ million)........
% increase to 7(a) and 504 loan amount relative 0.1% 10.9% 0.1% 0.3%
to the total amount of 7(a) and 504 loans to
small businesses...............................
Total no. of EIDL loans to small businesses (FY 406 1 178 585
2016-2018).....................................
Total amount of EIDL loans to small businesses $25.2 $0.0 $11.0 $36.2
(FY 2016-2018).................................
Estimated no. of additional EIDL loans to newly- 0 1 0 1
qualified small firms..........................
Estimated additional EIDL loan amount to newly- $0.02 $0.02 -$0.01 $0.03
qualified small firms ($ million)..............
% increase to EIDL loan amount relative to the 0.1% 100.0% -0.12% 0.1%
total amount of EIDL loans to small businesses.
----------------------------------------------------------------------------------------------------------------
\1\ Total impact represents total unique industries impacted to avoid double counting as some industries have
large firms gaining small business status and small firms extending small business status.
\2\ Additional dollars are calculated multiplying average small business dollars obligated per DUNS times change
in number of firms.
Alternative Option Two: To Retain All Current Size Standards
Under this option, given the current COVID-19 pandemic, as
discussed elsewhere, SBA considered retaining the current levels of all
size standards even though the analytical results may suggest changing
them. SBA considers that the option of retaining all size standards at
this moment provides the opportunity to reassess the economic situation
once the economic recovery starts. Under this option, as the current
situation develops, SBA will be able to assess new data available on
economic indicators, federal procurement, and SBA loans as well. SBA
estimates a net impact of zero for this option, when compared to the
baseline. However, if we compare the proposal of increasing 46 size
standards and retaining 48 with this alternative approach, the benefits
for small businesses of adopting the proposal will not be attained, so
SBA is not proposing the Alternative Option Two.
Executive Order 13771
SBA has determined, subject to the approval of the Office of
Information and Regulatory Affairs (OIRA) of the Office of Management
and Budget (OMB), that this proposed rule is not subject to the
requirements of E.O. 13771 because most of the proposed rule's impacts
are income transfers between small and other than small businesses.
According to the E.O. 13771 guidance in OMB M-17-21, dated April 5,
2017 (``E.O. 13771 Guidance''), ``transfers'' are not covered by E.O.
13771. The E.O. 13771 guidance also states that ``in some cases,
[transfer rules] may impose requirements apart from transfers, or
transfers may distort markets causing inefficiencies. In those cases,
the actions would need to be offset to the extent they impose more than
de minimis costs.'' SBA estimates that this rulemaking would impose
only de minimis costs on small businesses and would result in
negligible compliance costs. Thus, SBA has determined that this
rulemaking is exempt from the requirements of E.O. 13771. Details on
the estimated costs of this proposed rule can be found in the
Regulatory Impact Analysis above.
Initial Regulatory Flexibility Analysis
According to the Regulatory Flexibility Act (RFA), 5 U.S.C. 601-
612, when an agency issues a rulemaking, it must prepare a regulatory
flexibility analysis to address the impact of the rule on small
entities.
This proposed rule, if adopted, may have a significant impact on a
substantial number of small businesses in the industries covered by
this proposed rule. As described above, this proposed rule may affect
small businesses seeking Federal contracts, loans under SBA's 7(a), 504
and EIDL Programs, and assistance under other Federal small business
programs.
Immediately below, SBA sets forth an initial regulatory flexibility
analysis (IRFA) of this proposed rule addressing the following
questions: (1) What is the need for and objective of the rule?; (2)
What is SBA's description and estimate of the number of small
businesses to which the rule will apply?; (3) What are the projected
reporting, record keeping, and other compliance requirements of the
rule?; (4) What are the relevant Federal rules that may duplicate,
overlap, or conflict with the rule?; and (5) What alternatives will
allow the Agency to accomplish its regulatory objectives while
minimizing the impact on small businesses?
1. What is 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 the industries covered by this proposed
rule. Such changes can be enough to support revisions to current size
standards for some industries. Based on the analysis of the latest data
available, SBA believes that the revised standards in this proposed
rule more appropriately reflect the size of businesses that need
Federal assistance. The 2010 Jobs Act also requires SBA to review all
size standards and make necessary adjustments to reflect market
conditions.
[[Page 72605]]
2. What is SBA's description and estimate of the number of small
businesses to which the rule will apply?
Based on data from the 2012 Economic Census, SBA estimates that
there are about 1.05 million small firms covered by this rulemaking
under industries with proposed changes to size standards. If the
proposed rule is adopted in its present form, SBA estimates that an
additional 1,530 businesses will be defined as small.
3. What are the projected reporting, record keeping and other
compliance requirements of the rule?
The proposed 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 SAM and self-certify that they are small at
least once annually. Therefore, businesses opting to participate in
those programs must comply with SAM requirements. Changes in small
business size standards do not result in additional costs associated
with SAM registration or certification. Changing size standards alters
the access to SBA's programs that 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 that may duplicate, overlap or
conflict with the rule?
Under section 3(a)(2)(C) of the Small Business Act, 15 U.S.C.
632(a)(2)(c), Federal agencies must use SBA's size standards to define
a small business, unless specifically authorized by statute to do
otherwise. In 1995, SBA published in the Federal Register a list of
statutory and regulatory size standards that identified the application
of SBA's size standards as well as other size standards used by Federal
agencies (60 FR 57988 (November 24, 1995)). SBA is not aware of any
Federal rule that would duplicate or conflict with establishing size
standards.
However, the Small Business Act and SBA's regulations allow Federal
agencies to develop different size standards if they believe that SBA's
size standards are not appropriate for their programs, with the
approval of SBA's Administrator (13 CFR 121.903). The Regulatory
Flexibility Act authorizes an Agency to establish an alternative small
business definition, after consultation with the Office of Advocacy of
the U.S. Small Business Administration (5 U.S.C. 601(3)).
5. What alternatives will allow the Agency to accomplish its regulatory
objectives while minimizing the impact on small entities?
By law, SBA is required to develop numerical size standards for
establishing eligibility for Federal small business assistance
programs. Other than varying size standards by industry and changing
the size measures, no practical alternative exists to the systems of
numerical size standards.
However, SBA considered two alternatives to its proposal to
increase 46 size standards and maintain 48 size standards at their
current levels. The first alternative SBA considered was adopting size
standards based solely on the analytical results. In other words, the
size standards of 46 industries for which the analytical results
suggest raising size standards would be raised. However, the size
standards of 42 industries for which the analytical results suggest
lowering size standards would be lowered. This would cause a
significant number of small businesses to lose their small business
status, particularly in sectors 54 and 56 (please see table 10). Under
the second alternative, in view of the COVID-19 pandemic, SBA
considered retaining all size standards at the current levels, even
though the analytical results may suggest increasing 46 size standards
and decreasing 42. Retaining all size standards at their current levels
would be more onerous for small businesses than the option of adopting
46 increases and retaining the rest of the size standards.
Executive Order 13563
Executive Order 13563 emphasizes the importance of quantifying both
costs and benefits, reducing costs, harmonizing rules, and promoting
flexibility. A description of the need for this regulatory action and
benefits and costs associated with this action, including possible
distributional impacts that relate to Executive Order 13563, is
included above in the Regulatory Impact Analysis under Executive Order
12866. Additionally, Executive Order 13563, section 6, calls for
retrospective analyses of existing rules.
The review of size standards in the industries covered by this
proposed rule is consistent with section 6 of Executive Order 13563 and
the 2010 Jobs Act, which requires SBA to review all size standards and
make necessary adjustments to reflect market conditions. Specifically,
the 2010 Jobs Act requires SBA to review at least one-third of all size
standards during every 18-month period from the date of its enactment
(September 27, 2010) and to review all size standards not less
frequently than once every 5 years, thereafter. SBA had already
launched a comprehensive review of size standards in 2007. In
accordance with the Jobs Act, SBA completed the comprehensive review of
the small business size standard for each industry, except those for
agricultural enterprises previously set by Congress, and made
appropriate adjustments to size standards for a number of industries to
reflect current Federal and industry market conditions. The first
comprehensive review was completed in 2015. Prior to 2007, the last
time SBA conducted a comprehensive review of all size standards was
during the late 1970s and early 1980s.
SBA issued a White Paper entitled ``Size Standards Methodology''
and published a notice in the April 11, 2019, edition of the Federal
Register (84 FR 14587) to advise the public that the document is
available for public review and comments. The ``Size Standards
Methodology'' White Paper explains how SBA establishes, reviews, and
modifies its receipts-based and employee-based small business size
standards. SBA gave appropriate consideration to all input,
suggestions, recommendations, and relevant information obtained from
industry groups, individual businesses, and Federal agencies in
developing size standards for those industries covered by this proposed
rule.
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
proposed rule will not have substantial, direct effects on the States,
on the relationship between the National Government and the States, or
on the distribution of power and responsibilities among the various
levels of government. Therefore, SBA has determined that this proposed
rule has no federalism implications warranting preparation of a
federalism assessment.
Paperwork Reduction Act
For the purpose of the Paperwork Reduction Act, 44 U.S.C. Ch. 35,
SBA has determined that this proposed rule
[[Page 72606]]
will not impose any new reporting or record keeping requirements.
List of Subjects in 13 CFR Part 121
Administrative practice and procedure, Government procurement,
Government property, Grant programs--business, Individuals with
disabilities, Loan programs--business, Reporting and recordkeeping
requirements, Small businesses.
For the reasons set forth in the preamble, SBA proposes to amend 13
CFR part 121 as follows:
PART 121--SMALL BUSINESS SIZE REGULATIONS
0
1. The authority citation for part 121 continues to read as follows:
Authority: 15 U.S.C. 632, 634(b)(6), 636(a)(36), 662, and
694a(9); Pub. L. 116-136, Section 1114.
0
2. In Sec. 121.201, amend the table by:
0
a. Revising the heading to Sector 56.
0
b. Revising entries ``541110,'' ``541191,'' ``541199,'' ``541211,''
``541214,'' ``541310,'' ``541330,'' ``541350,'' ``541360,'' ``541420,''
``541490,'' ``541513,'' ``541611,'' ``541612,'' ``541614,'' ``541720,''
``541810,'' ``541830,'' ``541840,'' ``541850,'' ``541860,'' ``541870,''
``541910,'' ``541921,'' ``541930,'' ``541940,'' ``541990,'' ``551111,''
``551112,'' ``561110,'' ``561330,'' ``561422,'' ``561439,'' ``561440,''
``561450,'' ``561499,'' ``561599,'' ``561612,'' ``561613,'' ``561710,''
``561730,'' ``561740,'' ``561910,'' ``561920,'' ``561990,'' and
``562998'' to 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 title in millions of in number of
dollars employees
----------------------------------------------------------------------------------------------------------------
* * * * * * *
----------------------------------------------------------------------------------------------------------------
Sector 54--Professional, Scientific and Technical Services
Subsector 541--Professional, Scientific and Technical Services
----------------------------------------------------------------------------------------------------------------
541110...................................... Offices of Lawyers............ $13.5 ................
541191...................................... Title Abstract and Settlement 17.0 ................
Offices.
541199...................................... All Other Legal Services...... 18.0 ................
541211...................................... Offices of Certified Public 23.5 ................
Accountants.
* * * * * * *
541214...................................... Payroll Services.............. 34.5 ................
* * * * * * *
541310...................................... Architectural Services........ 11.0 ................
* * * * * * *
541330...................................... Engineering Services.......... 22.5 ................
* * * * * * *
541350...................................... Building Inspection Services.. 10.0 ................
541360...................................... Geophysical Surveying and 25.0 ................
Mapping Services.
* * * * * * *
541420...................................... Industrial Design Services.... 15.0 ................
* * * * * * *
541490...................................... Other Specialized Design 12.0 ................
Services.
* * * * * * *
541513...................................... Computer Facilities Management 32.5 ................
Services.
* * * * * * *
541611...................................... Administrative Management and 21.5 ................
General Management Consulting
Services.
541612...................................... Human Resources Consulting 25.5 ................
Services.
* * * * * * *
541614...................................... Process, Physical 17.5 ................
Distribution, and Logistics
Consulting Services.
* * * * * * *
541720...................................... Research and Development in 24.5 ................
the Social Sciences and
Humanities.
541810...................................... Advertising Agencies \10\..... \10\ 22.5 ................
* * * * * * *
541830...................................... Media Buying Agencies......... 28.5 ................
541840...................................... Media Representatives......... 18.5 ................
541850...................................... Outdoor Advertising........... 30.5 ................
541860...................................... Direct Mail Advertising....... 19.5 ................
541870...................................... Advertising Material 25.0 ................
Distribution Services.
[[Page 72607]]
* * * * * * *
541910...................................... Marketing Research and Public 20.0 ................
Opinion Polling.
541921...................................... Photography Studios, Portrait. 14.0 ................
* * * * * * *
541930...................................... Translation and Interpretation 20.0 ................
Services.
541940...................................... Veterinary Services........... 9.0 ................
541990...................................... All Other Professional, 17.0 ................
Scientific and Technical
Services.
----------------------------------------------------------------------------------------------------------------
Sector 55--Management of Companies and Enterprises
Subsector 551--Management of Companies and Enterprises
----------------------------------------------------------------------------------------------------------------
551111...................................... Offices of Bank Holding 34.0 ................
Companies.
551112...................................... Offices of Other Holding 40.0 ................
Companies.
----------------------------------------------------------------------------------------------------------------
Sector 56--Administrative and Support and Waste Management and Remediation Services
Subsector 561--Administrative and Support Services
----------------------------------------------------------------------------------------------------------------
561110...................................... Office Administrative Services 11.0 ................
* * * * * * *
561330...................................... Professional Employer 36.5 ................
Organizations.
* * * * * * *
561422...................................... Telemarketing Bureaus and 22.5 ................
Other Contact Centers.
* * * * * * *
561439...................................... Other Business Service Centers 23.5 ................
(including Copy Shops).
561440...................................... Collection Agencies........... 17.0 ................
561450...................................... Credit Bureaus................ 36.0 ................
* * * * * * *
561499...................................... All Other Business Support 19.0 ................
Services.
* * * * * * *
561599...................................... All Other Travel Arrangement 28.5 ................
and Reservation Services.
* * * * * * *
561612...................................... Security Guards and Patrol 25.5 ................
Services.
561613...................................... Armored Car Services.......... 38.0 ................
* * * * * * *
561710...................................... Exterminating and Pest Control 15.5 ................
Services.
* * * * * * *
561730...................................... Landscaping Services.......... 8.5 ................
561740...................................... Carpet and Upholstery Cleaning 7.5 ................
Services.
* * * * * * *
561910...................................... Packaging and Labeling 17.0 ................
Services.
561920...................................... Convention and Trade Show \10\ 17.5 ................
Organizers \10\.
561990...................................... All Other Support Services.... 14.5 ................
----------------------------------------------------------------------------------------------------------------
Subsector 562--Waste Management and Remediation Services
----------------------------------------------------------------------------------------------------------------
* * * * * * *
562998...................................... All Other Miscellaneous Waste 14.5 ................
Management Services.
* * * * * * *
----------------------------------------------------------------------------------------------------------------
Footnotes
* * * * * * *
\10\ NAICS codes 488510 (excluding the exception), 531210, 541810, 561510, 561520 and 561920--As measured by
total revenues, but excluding funds received in trust for an unaffiliated third party, such as bookings or
sales subject to commissions. The commissions received are included as revenue.
* * * * * * *
[[Page 72608]]
Jovita Carranza,
Administrator.
[FR Doc. 2020-24903 Filed 11-12-20; 8:45 am]
BILLING CODE 8026-03-P
