SBA’s recent proposed rule will increase size standards for a number of industries. The rule also said that SBA was thinking about lowering size standards. While most often, size standards increase over time, SBA can also lower them. However, SBA decided against lowering them. Read on for what standards will change.
SBA’s size standards determine whether a company can bid on procurements restricted to small businesses. They determine whether a company is “small” for a particular procurement. So, when SBA proposes to change those size standards, it can have a big impact on which companies are eligible for procurements going forward.
SBA adjusts its size standards periodically based on
[T]he 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.
SBA also looks at small business federal contracting as a share of total federal contracting. For perspective, there are 27 different size standards levels covering 1,023 NAICS industries.
In this rule, SBA proposes to increase size standards for 46 industries 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).
The proposed rule provides a table listing the changes for all 46 industries with increases. Because there are so many, I won’t list them here. But a summary of the changes is below:
| Sector | Sector name | Number of size standards reviewed | Number of size standards increased | Number of size standards decreased | Number of size standards maintained |
|---|---|---|---|---|---|
| 54 | Professional, Scientific and Technical Services | 48 | 27 | 0 | 21 |
| 55 | Management of Companies and Enterprises | 2 | 2 | 0 | 0 |
| 56 | Administrative and Support, Waste Management and Remediation Services | 44 | 17 | 0 | 27 |
| Total | 94 | 46 | 0 | 48 |
Here are some examples, all in millions of dollars. Some of these increases are pretty large and some are fairly minor.
- 541214 Payroll Services increasing to 34.5 from 22.0
- 541310 Architectural Services increasing to 11.0 from 8.0
- 541330 Engineering Services increasing to 22.5 from 16.5
- 541990 All Other Professional, Scientific and Technical Services increasing to 17.0 from 16.5
Interestingly, SBA’s calculations actually support decreasing size standards for a number of industries. But SBA chose to keep those size standards the same, rather than decreasing them, because of “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.”
These changes will impact the size standards of a number of industries, so pay attention if your business commonly bids on work set aside under those NAICS codes. If you don’t agree with the proposed changes, comments are due by January 12, 2021. This means the changes won’t go into effect until some time in 2021.
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