SBA Proposes Eliminating Megawatt Hours Size Standard

Most government contractors determine their small business size based on average annual receipts or employee counts.  But for companies working in six NAICS codes in NAICS Sector 22, the firm is considered small if: (1) the firm, including its affiliates, is primarily engaged in the generation, transmission, and/or distribution of electric energy for sale; and (2) its total electric output for the preceding fiscal year did not exceed 4 million megawatt hours.  Today, the SBA proposed eliminating this megawatt hours size standard and replacing it with a 500 employee size standard.

In a proposed rule, the SBA stated that significant industry changes have occurred since the megawatt hour standard was adopted in 1974, that the “primarily engaged” requirement could result in some businesses being unfairly deemed large, and that an employee-based size standard is more in keeping with overall SBA size standard policy.  Accordingly, the SBA proposed changing the size standards for all six affected NAICS codes–221111, 221112, 221113, 221199, 221121, and 221122–from 4 million megawatt hours to 500 employees.

In today’s proposed rule, the SBA also proposed three significant size standard increases.  Under the SBA’s proposal, NAICS code 221310 (Water Supply and Irrigation Systems) would jump from $7 million to $25.5 million, NAICS code 221320 (Sewage Treatment Facilities) would increase from $7 million to $19 million and NAICS code 221330 (Steam and Air-Conditioning Supply) would increase from $12.5 million to $14 million.

Today’s proposed changes are part of the SBA’s ongoing review and overhaul of its size standards.  The SBA is accepting comments on today’s rule by September 17.

Leave a Reply

Your email address will not be published. Required fields are marked *