What’s on SBA’s Regulatory Plate for 2022? A Hint: Increased Size Standards

SBA publishes its semiannual Regulatory Agenda to provide an update on the various rules it has in the pipeline and an estimate for when they will be published or become final. While SBA doesn’t have to meet these timeframes, it’s always good to check in on what SBA has been working on when the final rules will come out. This agenda includes an update on increased size standards, along with some other important rules. Read on for the highlights and be sure to comment on any rules that you have an opinion on.

Here are the key rules, along with a summary and the next steps for that rule.

Proposed Rules

  • Small Business Size Standards: Manufacturing and Industries With Employee Based Size Standards in Other Sectors Except Wholesale Trade and Retail Trade. SBA is reviewing its size standards to consider adjustments to reflect market conditions for NAICS codes in Sector 31-33 (Manufacturing) and industries with employee-based size standards in other sectors. SBA anticipates a proposed rule in March 2022.
  • Small Business Size Standards: Calculation of Number of Employees for All Programs and of Average Annual Receipts in Business Loan, Disaster Loan, and Small Business Investment Company Programs. SBA will be proposing rules to address the 2021 NDAA rule that changed the employee-based size standards lookback period from 12 months to 24 months. It will also propose rules for average annual receipts using a 5-year average for SBA loan programs. SBA did not include a timetable for the final rule, but comments on the initial rule ended December 2021 for the proposed rule issued in November 2021 that we discussed on the blog here, so it’s possible the final rule comes out in 2022.
  • National Defense Authorization Act of 2020, Credit for Lower Tier Subcontracting and Other Amendments. The SBA will be issuing a proposed rule to address how the 2020 NDAA required “SBA to alter the method and means of accounting for lower tier small business subcontracting.” This is a fairly limited change for subcontracting plan credit and SBA expects the proposed rule to come out in May 2022.

Final Rule Stage

  • Small Business Size Standards: Educational Services; Health Care and Social Assistance; Arts, Entertainment and Recreation; Accommodation and Food Services; Other Services. SBA has reviewed and will adjust size standards for all industries in North American Industry Classification System (NAICS) Sector 61 (Educational Services), Sector 62 (Health Care and Social Assistance), Sector 71 (Arts, Entertainment and Recreation), Sector 72 (Accommodation and Food Services), and Sector 81 (Other Services). The proposed rule suggested size increases for 70 industries, including, for example, 621910 Ambulance Services increasing to $20 million from $16.5 million. SBA expects the final rule in June 2022.
  • Small Business Size Standards: Agriculture, Forestry, Fishing and Hunting; Mining, Quarrying, and Oil and Gas Extraction; Utilities; Construction. This proposed rule would increase size standards for 68 industries in Sector 11 (Agriculture, Forestry, Fishing and Hunting), Sector 21 (Mining, Quarrying, and Oil and Gas Extraction), Sector 22 (Utilities), and Sector 23 (Construction). Only two construction size standards would increase. For instance, 238290 Other Building Equipment Contractors would go from $16.5 million to $19.5 million. SBA expects a final rule in July 2022.
  • Small Business Size Standards: Transportation and Warehousing; Information; Finance and Insurance; Real Estate and Rental and Leasing. This proposed rule would increase size standards for 45 industries in Sector 48-49 (Transportation and Warehousing), Sector 51 (Information), Sector 52 (Finance and Insurance), and Sector 53 (Real Estate and Rental and Leasing). For example, 484122 General Freight Trucking, Long-Distance, Less Than Truckload would increase to $38.0 million from $30.0 million. SBA expects the final rule in August 2022.
  • Small Business Size Standards: Professional, Scientific and Technical Services; Management of Companies and Enterprises; Administrative and Support and Waste Management and Remediation Services. This proposed rule would increase size standards for 46 industries in Sector 54 (Professional, Scientific and Technical Services), Sector 55 (Management of Companies and Enterprises), and Sector 56 (Administrative and Support, Waste Management and Remediation Services). For example, 541330 Engineering Services is increasing to $22.5 million from $16.5 million, while 541310 Architectural Services is increasing to $11.0 million from $8.0 million. SBA expects the final rule in June 2022.

There are a number of important changes summarized here that are going to have proposed rules issued or scheduled to go into effect over the next few months. The size standards, for one, could allow companies to remain as small businesses for many more years.

Interestingly, there was no mention of the timeline for the proposed rules on the SDVOSB verification process moving to SBA and getting rid of SDVOSB self-certification. We’ll keep you updated on SmallGovCon once the final versions of these rules are released, so stay tuned.

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