employee-based size standards | SmallGovCon - Government Contracts Law Blog

The SBA has issued a final rule eliminating the unusual megawatt hours size standard applicable to six NAICS codes in NAICS Sector 22. The SBA’s revision replaces the megawatt hours size standard with a 500-employee size standard, and eliminates the requirement that a firm must be “primarily engaged” in the generation, transmission or distribution of energy for sale.

Although the megawatt hours size standard may have made sense when it was adopted in the 1970s, the SBA appropriately recognized that the market has changed. Perhaps most important, the “primarily engaged” component of the megawatt hours size standard unfairly excluded many companies from competing as “small” in NAICS Sector 22.

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Back in my undergraduate days at Duke, I attended almost all of the home basketball games. Occasionally, sometime in the second half, with the Blue Devils up 20 points or more, an opposing player would execute an impressive dunk, and proceed to do a little celebration. I, along with my fellow Cameron Crazies, would immediately begin chanting, “scoreboard, scoreboard,” while pointing at the device in question. Our message was, “that’s nice, but it just doesn’t matter.” (Actually, we Crazies sometimes chanted “just doesn’t matter,” too).

“That’s nice, but it just doesn’t matter” is what the SBA’s Office of Hearings and Appeals had to say in a recent size appeal decision involving the question of whether employees who are sick, on vacation, or even comatose count toward a company’s employee-based SBA size standard. SBA OHA’s answer: if they’re on the payroll, they count. Period.

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