Small Business Size Standards: Industries With Employee Based Size Standards Not Part of Manufacturing, Wholesale Trade, or Retail Trade
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Proposed rule.
CFR Part: "13 CFR Part 121"
RIN Number: "RIN 3245-AG51"
Citation: "79 FR 53646"
Page Number: "53646"
"Proposed Rules"
SUMMARY: The
DATES: SBA must receive comments to this proposed rule on or before
ADDRESSES: Identify your comments by RIN 3245-AG51 and submit them by one of the following methods: (1) Federal eRulemaking Portal: www.regulations.gov, following the instructions for submitting comments; or (2) Mail/Hand Delivery/Courier:
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
FOR FURTHER INFORMATION CONTACT:
SUPPLEMENTARY INFORMATION:
Introduction
In an effort to remove possible public confusion, SBA would like to explain the changes made to the title of this rule. When SBA initially announced in the Fall 2012 Unified Agenda of Federal Regulatory and Deregulatory Actions, 78 FR 1636 at 1639 (
To determine eligibility for Federal small business assistance, SBA establishes small business size definitions (referred to as size standards) for private sector industries in
Over the years, SBA has received comments that its size standards have not kept up with changes in the economy, in particular the changes in the Federal contracting marketplace and industry structure. The last time SBA conducted a comprehensive size standards review was during the late 1970s and early 1980s. Since then, most reviews of size standards were limited to a few specific industries, mostly with receipts based size standards, in response to requests from the public and Federal agencies. SBA reviews all monetary based size standards (except for statutorily set size standards in NAICS Sector 11) for inflation at least once every five years. SBA's latest inflation adjustment to size standards was published in the
Because of changes in the Federal marketplace and industry structure since the last comprehensive size standards review, SBA recognizes that current data may no longer support some of its existing size standards. Accordingly, in 2007, SBA began a comprehensive review of all size standards to determine if they are consistent with current data, and to adjust them when necessary. In addition, on
Rather than review all size standards at one time, SBA is reviewing size standards on a Sector by Sector basis. A NAICS Sector generally includes 25 to 75 industries, except for NAICS Sector 31-33, Manufacturing, which has considerably more industries. As stated above, this proposed rule covers industries with employee based size standards that are not part of NAICS Sector 31-33 (Manufacturing), Sector 42 (Wholesale Trade), or Sector 44-45 (Retail Trade). These include one industry each in NAICS Sector 11 (Agriculture, Forestry, Fishing and Hunting), Sector 22 (Utilities) and Sector 52 (Finance and Insurance), 25 industries in Sector 21 (Mining, Quarrying, and Oil and Gas Extraction), 15 industries in Sector 48-49 (Transportation and Warehousing), 12 industries in Sector 51 (Information), two industries and four sub-industries ("exceptions") in Sector 54 (Professional, Scientific and Technical Services), and one sub-industry ("exception") in Sector 56 (Administrative and Support, Waste Management and Remediation Services) that currently have employee based size standards. Once SBA completes its review of size standards for industries in a NAICS Sector, it issues a proposed rule to revise size standards for those industries based on latest industry and program data available and other relevant factors, such as current economic climate and SBA's and other government's programs and policies to help small businesses.
Below is a discussion of SBA's size standards methodology for establishing employee based size standards that the Agency applied to this proposed rule, including analyses of industry structure, Federal contracting factors, the impact of the proposed revisions to size standards on SBA's financial assistance to small businesses, and the evaluation of whether a revised size standard would exclude dominant firms from being considered small.
Size Standards Methodology
In conjunction with the current comprehensive size standards review, SBA developed a "Size Standards Methodology" (methodology) for developing, reviewing, and modifying size standards when necessary. SBA published the document on its Web site at www.sba.gov/size for public review and comments, and has also included it as a supporting document in the electronic docket of this proposed rule at www.regulations.gov. It should be noted that SBA does not apply all features of its methodology to all industries because not all features are appropriate for every industry. For example, since all industries that are being reviewed in this proposed rule have employee based size standards, the methodology described in this proposed rule relates only to establishing employee based size standards. However, the methodology is available in its entirety for parties who have an interest in SBA's overall approach to establishing, evaluating, and modifying small business size standards. SBA always explains its methodology and analysis in individual proposed and final rules relating to size standards for specific industries.
SBA welcomes comments from the public on a number of issues concerning its "Size Standards Methodology," that the Agency has applied in this proposed rule, such as whether there are other approaches to establishing and modifying size standards; whether there are alternative or additional factors that SBA should consider; whether SBA's approach to small business size standards makes sense in the current economic environment; whether SBA's use of anchor size standards is appropriate; whether there are gaps in SBA's methodology because the data it uses are not current or sufficiently comprehensive; and whether there are other data, facts, and/or issues that SBA should consider. Comments on SBA's size standards methodology should be submitted via: (1) The Federal eRulemaking Portal: www.regulations.gov, following the instructions for submitting comments; the docket number is SBA-2009-0008, or (2) Mail/Hand Delivery/Courier:
Congress granted SBA's Administrator the 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 Administrator." Accordingly, the economic structure of an industry is the basis for developing and modifying small business size standards. SBA identifies the small business segment of an industry by examining the latest available data on the economic characteristics defining the industry structure (as described below). In addition, SBA considers current economic conditions, its mission and program objectives, the Administration's current policies, suggestions from industry groups and Federal agencies, and public comments on proposed rules. SBA also examines whether a size standard based on industry and other relevant data successfully excludes businesses that are dominant in the industry.
This proposed rule includes information regarding the factors SBA evaluated and the criteria it used to propose adjustments, where necessary, to employee based size standards for 57 industries and five sub-industries ("exceptions") covered by this rule. This proposed rule affords the public an opportunity to review and to comment on SBA's proposal to revise size standards for certain industries, as well as on the data and methodology it used to evaluate and revise the size standards.
Industry Analysis
For the current comprehensive size standards review, SBA has established three "base" or "anchor" size standards--
These long-standing anchor size standards have stood the test of time and gained legitimacy through practice and general public acceptance. An anchor is neither a minimum nor a maximum size standard. It is a common size standard for a large number of industries that have similar economic characteristics and serves as a reference point in evaluating size standards for individual industries. SBA uses the anchor in lieu of trying to establish precise small business size standards for each industry. Otherwise, theoretically, the number of size standards might be as high as the number of industries for which SBA establishes size standards (i.e., more than 1,000). Furthermore, the data SBA analyzes are static, while the U.S. economy is not. Hence, absolute precision is impossible. Similarly, because of the disclosure problem in getting the distribution of firms by more granular size classes, the 2007 Economic Census tabulation (the latest available when this proposed rule was prepared) that SBA received from the
When evaluating a size standard, SBA compares the economic characteristics of the industry under review to the average characteristics of industries with one of the three anchor size standards (referred to as the "anchor comparison group"). This allows SBA to assess the industry structure and to determine whether the industry is appreciably different from the other industries in the anchor comparison group. If the characteristics of a specific industry under review are similar to the average characteristics of the anchor comparison group, the anchor size standard is generally appropriate for that industry. SBA may consider adopting a size standard below the anchor when: (1) All or most of the industry characteristics are significantly smaller than the average characteristics of the anchor comparison group; or (2) other industry considerations strongly suggest that the anchor size standard would be an unreasonably high size standard for the industry.
If the specific industry's characteristics are significantly higher than those of the anchor comparison group, then a size standard higher than the anchor size standard may be appropriate. The larger the differences are between the characteristics of the industry under review and those in the anchor comparison group, the larger will be the difference between the appropriate industry size standard and the anchor size standard. To determine a size standard above the anchor size standard, SBA analyzes the characteristics of a second comparison group.
For industries with employee based size standards reviewed in this proposed rule, SBA has developed a second comparison group consisting of industries that have the highest of employee based size standards. To determine a size standard above the 500-employee anchor size standard, SBA analyzes the characteristics of this second comparison group. The industries in this group have size standards of either 1,000 employees or 1,500 employees; the weighted average size standard for the group is 1,323 employees. SBA refers to this comparison group as the "higher level employee based size standard group."
To examine industry structure, SBA evaluates average firm size, startup costs and entry barriers, industry competition, and distribution of firms by size. SBA also evaluates the level and small business share of total Federal contracting dollars. These are, generally, the five primary factors SBA examines when establishing or revising a size standard for an industry. However, SBA will also consider and evaluate other information that it believes is relevant to a particular industry (such as technological changes, growth trends, SBA financial assistance, other program factors, etc.). 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 a proposed rule also provide important additional information. SBA thoroughly reviews all public comments before making a final decision on its proposed size standards.
Below are brief descriptions of each of the five primary factors that SBA has evaluated for each industry and sub-industry covered by this proposed rule. A more detailed description of these factors is provided in SBA's "Size Standards Methodology," available at http://www.sba.gov/size.
1. Average firm size. SBA computes two measures of average firm size: Simple average and weighted average. For industries with employee based size standards, the simple average firm size is the total number of employees in an industry divided by the total number of firms in that industry. The weighted average firm size is the sum of weighted simple average firm sizes in different employee size classes, where weights are the shares of total industry employees for respective employee size classes. The simple average firm size weighs all firms within an industry equally regardless of their size. The weighted average firm size overcomes that limitation by giving more weight to larger firms.
If the average firm size of an industry is significantly higher than the average firm size of industries in the anchor comparison industry group, this will generally support a size standard higher than the anchor size standard. Conversely, if the industry's average firm size is similar to or significantly lower than that of the anchor comparison industry group, it will be a basis to adopt the anchor size standard, or, in rare cases, a standard lower than the anchor.
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 new firms entering a particular industry have greater capital requirements than firms in industries in the anchor comparison group, this can be a basis for establishing a size standard higher than the anchor size standard. In lieu of actual startup cost data, SBA uses average assets as a proxy to measure the capital requirements for new entrants to an industry.
To calculate average assets, SBA begins with the sales to total assets ratio for an industry from the
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 "four-firm concentration ratio," a commonly used economic measure of market competition. If a significant share of economic activity within the industry is concentrated among a few relatively large companies, all else being equal, SBA will establish a size standard higher than the anchor size standard. SBA does not consider the four-firm concentration ratio as an important factor in assessing a size standard if its share of economic activity of the largest four firms within the industry is less than 40 percent. For an industry with a four-firm concentration ratio of 40 percent or more, SBA compares the average employee size of the four largest firms in the industry with the four largest firms' average employee size for the anchor and higher level size comparison groups to determine an employee size standard for that industry.
4. Distribution of firms by size. For employee based size standards, SBA examines the shares of industry total receipts accounted for by firms of various employment size classes in an industry. This is an additional factor SBA examines in assessing industry competition. If most of an industry's economic activity is attributable to smaller firms, this generally indicates that small businesses are competitive in that industry. This can, generally, support adopting the anchor size standard. If most of an industry's economic activity is attributable to larger firms, this indicates that small businesses are not competitive in that industry. This can support adopting a size standard above the anchor.
Concentration is a measure of inequality of distribution. To determine the degree of inequality of distribution in an industry, SBA computes the Gini coefficient by constructing the Lorenz curve. The Lorenz curve presents the cumulative percentages of units (firms) in various employee size classes along the horizontal axis and the cumulative percentages of receipts (or other measures of size) in the same employee size classes along the vertical axis. (For further detail, please refer to SBA's "Size Standards Methodology" on its Web site 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 attributed to a single firm, the Gini coefficient will equal one.
SBA compares the Gini coefficient value for an industry with that for industries in the anchor comparison group. If the Gini coefficient value for an industry is higher than it is for industries in the anchor comparison industry group this may, all else being equal, warrant a size standard higher than the anchor. Conversely, if an industry's Gini coefficient is similar to or lower than that for the anchor group, the anchor standard, or in some cases a standard lower than the anchor, may be adopted.
5. Impact on Federal contracting and SBA loan programs. SBA examines the possible impact a size standard change may have on Federal small business assistance. This most often focuses on the level and small business share of total Federal contracting dollars in the industry in question. In general, if the small business share of total Federal contracting dollars in an industry with significant Federal contracting is appreciably less than the small business share of the industry's total receipts, this could justify considering a size standard higher than the existing size standard. If the small business share of an industry's total Federal contracting dollars is similar to or higher than the small business share of its total receipts, this would support the existing size standard for that industry. By comparing the small business share in the Federal market with the small business share in the industry-wide market, SBA accounts for conditions in the Federal market in its size standards analysis. The disparity between the small business Federal market share and small business industry-wide share may be due to various factors, such as extensive administrative and compliance requirements associated with Federal contracts, the different skill set required for Federal contracts as compared to typical commercial contracting work, and the size of Federal contracts. Data permitting, SBA will also examine these, as well as other factors that are likely to influence the type of firms within an industry that compete for Federal contracts.
SBA considers the Federal contracting factor in an industry's size standards analysis only if the industry's total Federal contracting dollars average
Besides the impact on small business Federal contracting, SBA also evaluates the impact of a proposed size standard revision on SBA's loan programs. For this, SBA examines the data on volume and number of its guaranteed loans within an industry and the size of firms obtaining those loans. This allows SBA to assess whether the existing, proposed, or revised size standard for a particular industry may restrict the level of financial assistance to small firms. If existing size standards are found to have impeded financial assistance to small businesses, higher size standards may be justified. However, if small businesses under existing size standards have been receiving significant amounts of financial assistance through SBA's loan programs, or if the financial assistance has been provided mainly to businesses that are much smaller than the existing size standards, SBA does not consider this factor when determining the size standard.
Sources of Industry and Program Data
SBA's primary source of industry data used in this proposed rule is a special tabulation of the 2007 Economic Census (see www.census.gov/econ/census07/) prepared by the
In some cases, where data are not available at the 6-digit industry level due to disclosure prohibitions in the
The data from the
Certain industries are not covered by Economic Census and not shown in the special tabulation. For those industries, SBA first identifies companies that are registered in SAM/CCR under those industry NAICS codes and then evaluates their employment and revenue data obtained from their SAM/CCR profiles. SBA applied this approach to evaluate industry factors for two industries in NAICS Sector 48-49 that are not covered by Economic Census, namely Line-Haul Railroads (NAICS 482111), and Short Line Railroads (NAICS 482112).
To calculate average assets, SBA used sales to total assets ratios from the
To evaluate the Federal contracting factor, SBA examined the data from FPDS-NG for fiscal years 2009-2011, available at https://www.fpds.gov and 2007 Economic Census tabulation, which is the latest available as stated elsewhere in the rule.
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 2010-2012.
Data sources and estimation procedures SBA uses in its size standards analysis are documented in detail in SBA's "Size Standards Methodology" White Paper, 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: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) meets a specific small business definition or size standard established by SBA's Administrator. SBA considers as part of its evaluation whether a business concern at a proposed or revised 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 standard. SBA also examines distribution of firms by size to ensure that a contemplated size standard derived from its size standards analysis excludes the largest firms within an industry. Market share, the size distribution and other factors 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 dominant or the largest firms in an industry, SBA will consider a lower size standard than the one suggested by the analytical results to exclude the dominant and largest firms from being defined as small.
Selection of Size Standards
Among the industries with employee based size standards not in NAICS Sector 31-33 (Manufacturing), Sector 42 (Wholesale Trade), or Sector 44-45 (Retail Trade), currently there are four size standards clusters: 500 employees, 750 employees, 1,000 employees, and 1,500 employees. In this proposed rule, SBA has applied its "Size Standards Methodology" for employee based size standards with two modifications. First, to be consistent with its policy of not lowering any size standards in all recent proposed and final rules on receipts based size standards, SBA is retaining the current 500-employee minimum and 1,500-employee maximum size standards for all industries in the Manufacturing Sector and other industries not in the Wholesale and Retail Trade Sectors that have employee based size standards. In its "Size Standards Methodology," SBA had proposed setting the minimum employee based size standard for these industries at 250 employees and the maximum size standard at 1,000 employees. However, doing so would mean lowering existing size standards, thereby making currently small businesses ineligible to continue their participation in Federal small business programs. This would run counter to what SBA and the Administration are doing to help small businesses to create jobs and boost economic growth. Second, SBA is proposing a new 1,250-employee size standard between 1,000 employees and 1,500 employees. This new size standard level maintains the same 250-employee increment between the two successive levels that SBA has below 1,000 employees (500, 750, 1,000). SBA proposes, therefore, to apply one of these five employee based size standards to the analysis of employee based size standards for industries in the Manufacturing Sector and other industries not in the Wholesale and Retail Trade Sectors: 500 employees, 750 employees, 1,000 employees, 1,250 employees, and 1,500 employees.
To simplify size standards and for other reasons, SBA may propose a common size standard for closely related industries. Although the size standard analysis may support a separate size standard for each industry, SBA believes that establishing different size standards for closely related industries may not always be appropriate. For example, in cases where many of the same businesses operate in the same multiple industries, a common size standard for those industries might better reflect the Federal marketplace. This might also make size standards among related industries more consistent than separate size standards for each of those industries. Whenever SBA proposes a common size standard for closely related industries it will provide its justification.
Evaluation of Industry Structure
In this proposed rule, SBA evaluated 57 industries and five sub-industries ("exceptions") with employee based size standards that are not in NAICS Sectors 31-33, 42, or 44-45 to assess the appropriateness of their current size standards. As described above, SBA compared data on the economic characteristics of each of those industries and sub-industries to the average characteristics of industries in two comparison groups. The first comparison group consists of all industries in Manufacturing and industries not in Wholesale Trade or Retail Trade with 500-employee size standards. SBA refers this group of industries to as the "employee based anchor comparison group." Because the goal of SBA's review is to assess whether a specific industry's size standard should be the same as or different from the anchor size standard, this is the most logical group of industries to analyze. In addition, this group includes a sufficient number of firms to provide a meaningful assessment and comparison of industry characteristics.
As stated previously, if the characteristics of an industry are similar to the average characteristics of industries in the anchor comparison group, the anchor size standard is generally appropriate for that industry. If an industry's structure is significantly different from industries in the anchor group, a size standard lower or higher than the anchor size standard might be appropriate. The proposed new size standard is based on the difference between the characteristics of the anchor comparison group and a second industry comparison group. As described above, the second comparison group for employee based standards consists of industries with either 1,000-employee or 1,500-employee size standards. The weighted average size standard for this group is 1,323 employees. SBA refers this group of industries to as the "higher level employee based size standard comparison group." SBA determines differences in industry structure between an industry under review and the industries in the two comparison groups by comparing data on each of the industry factors, including average firm size, average assets size, the four-firm concentration ratio, and the Gini coefficient of distribution of firms by size. Table 1, Average Characteristics of Employee Based Comparison Groups, shows the average firm size (both simple and weighted), average assets size, four-firm concentration ratio, average employees of the four largest firms, and the Gini coefficient for both anchor level and higher level comparison groups for employee based size standards.
Table 1--Average Characteristics of Employee Based Comparison Groups Average firm size (number of employees) Employee Simple Weighted Average Four-firm Average Gini based average average assets concentrat employees coefficient comparison size ion of four group ( $ ratio largest million) (%) firms * Anchor 51 322$6.4 35.9 1,267 0.765 Level Higher 136 602 37.0 64.3 2,033 0.808 Level * To be used for industries with a four-firm concentration ratio of 40% or greater.
Derivation of Size Standards Based on Industry Factors
For each industry factor in Table 1, Average Characteristics of Employee Based Comparison Groups, SBA derives a separate size standard based on the differences between the values for an industry under review and the values for the two comparison groups. If the industry value for a particular factor is near the corresponding factor for the anchor comparison group, the 500-employee anchor size standard is appropriate for that factor.
An industry factor significantly above or below the anchor comparison group will generally imply a size standard for that industry above or below the 500-employee anchor. The new size standard in these cases is based on the proportional difference between the industry value and the values for the two comparison groups.
For example, an industry's simple average firm size of 75 employees will support a 750-employee size standard. The 75-employee level is 28.2 percent between 51 employees for the anchor comparison group and 136 employees for the higher level comparison group ((75 employees - 51 employees) / (136 employees - 51 employees) = 0.282 or 28.2%). This proportional difference is applied to the difference between the size standard of 500 employees for the anchor level size standard group and average size standard of 1,323 employees for the higher level size standard group and then added to 500 employees to estimate a size standard of 733 employees ([{1,323 employees - 500 employees} * 0.282] + 500 employees = 733 employees). The final step is to round the estimated 733-employee size standard to the nearest size standard level, which in this example is 750 employees.
SBA applies the above calculation to derive a size standard for each industry factor. Detailed formulas involved in these calculations are presented in SBA's "Size Standards Methodology" which is available on its Web site at www.sba.gov/size. As stated above, SBA has also included its "Size Standards Methodology" as a supporting document in the electronic docket of this proposed rule at www.regulations.gov. (However, it should be noted that figures in the "Size Standards Methodology" White Paper are based on 2002 Economic Census data and are different from those presented in this proposed rule. That is because when SBA prepared its "Size Standards Methodology," the 2007 Economic Census data were not yet available). Table 2, Values of Industry Factors and Supported Size Standards, below, shows ranges of values for each industry factor and the levels of size standards supported by those values.
Table 2--Values of Industry Factors and Supported Size Standards If simple Or if Or if Or if Or if Gini Then implied average firm weighted average average coefficient size size average firm assets size number standard is (number of size ( $million) employees of (number of employees) (number of largest four employees) employees) firms < 63.9 < 364.5 < 11.1 < 1,383.3 < 0.772 500 63.9 to < 364.5 to < 11.1 to < 1,383.3 to < 0.772 to < 750 89.7 449.6 20.3 1,616.0 0.785 89.7 to < 449.6 to < 20.3 to < 1,616.0 to < 0.785 to < 1,000 115.6 534.6 29.6 1,848.7 0.798 115.6 to < 534.6 to < 29.6 to < 1,848.7 to < 0.798 to < 1,250 141.4 619.7 38.9 2,081.4 0.811 >/= 141.4 >/= 619.7 >/= 38.9 >/= 2,081.4 >/= 0.811 1,500
Derivation of Size Standard 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 industries where Federal contract dollars average
Because of the complex relationships among several variables affecting small business participation in the Federal marketplace, SBA has chosen not to designate a size standard for the Federal contracting factor alone that is more than two levels above the current size standard. SBA believes that a larger adjustment to size standards based on Federal contracting activity should be based on a more detailed analysis of the impact of any subsequent revision to the current size standard. In limited situations, however, SBA may conduct a more extensive examination of Federal contracting experience. This may support a different size standard than indicated by this general rule and take into consideration significant and unique aspects of small business competitiveness in the Federal contract market. SBA welcomes comments on its methodology for incorporating the Federal contracting factor in its size standard analysis and suggestions for alternative methods and other relevant information on small business experience in the Federal contract market that SBA should consider.
Of the 57 industries reviewed in this proposed rule, 14 averaged
New Size Standards Based on Industry and Federal Contracting Factors
Table 3, Size Standards Supported by Each Factor for Each Industry (No. of Employees), below, shows the results of analyses of industry and Federal contracting factors for each industry covered by this proposed rule. Many NAICS industries in columns 2, 3, 4, 6, and 7 show two numbers. The upper number is the value for the industry factor shown on the top of the column and the lower number is the size standard supported by that factor. For the four-firm concentration ratio, SBA estimates a size standard only if its value is 40 percent or more. If the four-firm concentration ratio for an industry is less than 40 percent, SBA does not estimate a size standard for that factor. If the four-firm concentration ratio is 40 percent or more, SBA indicates in column 6 the average size of the industry's four largest firms together with a size standard based on that average. Column 9 shows a calculated new size standard for each industry. This is the average of the size standards supported by each factor, rounded to the nearest fixed size level. However, the size standards for the simple average and weighted average firm size are averaged together, and therefore receive a single weight. Analytical details involved in the averaging procedure are described in SBA's "Size Standards Methodology." For comparison with the new standards, the current size standards are in column 10 of Table 3.
Table 3--Size Standards Supported by Each Factor for Each Industry (No. of Employees) [Upper Value = Calculated Factor, Lower Value = Size Standard Supported] NAICS Code Simple Weighted Average Four-firm Four-firm NAICS industry average average assets size ratio average title firm size firm size ( $million) % size (number of (number of (number of employees) employees) employees) (1) (2) (3) (4) (5) (6) 113310 Logging 6 31$0.5 500 500 500 211111 Crude 28 790$70.5 31.1 Petroleum and 500 1,500 1,500 Natural Gas Extraction 211112 Natural 65 175$234.1 50.7 588 Gas Liquid 750 500 1,500 500 Extraction 212111 Bituminous 99 712$34.6 36.5 Coal and Lignite 1,000 1,500 1,250 Surface Mining 212112 Bituminous 163 1,062$40.3 42.5 3,490 Coal Underground 1,500 1,500 1,500 1,500 Mining 212113 Anthracite 12 29$4.5 54.2 46 Mining 500 500 500 500 212210 Iron Ore 356 2,352 99.1 1,220 Mining 1,500 1,500 500 212221 Gold Ore 114 2,207 Mining 1,000 1,500 212222 Silver Ore 69 124 Mining 750 500 212231 Lead Ore 251 457 89.6 436 and Zinc Ore 1,500 1,000 500 Mining 212234 Copper Ore 472 2,215 93.0 2,369 and Nickel Ore 1,500 1,500 1,500 Mining 212291 Uranium- 20 62 92.7 85 Radium-Vanadium 500 500 500 Ore Mining 212299 All Other 218 569 91.8 913 Metal Ore Mining 1,500 1,250 500 212311 Dimension 15 44 12.3 Stone Mining and 500 500 Quarrying 212312 Crushed 53 398$15.7 37.1 and Broken 500 750 750 Limestone Mining and Quarrying 212313 Crushed 50 361 62.1 1,026 and Broken 500 500 500 Granite Mining and Quarrying 212319 Other 24 94$6.1 28.5 Crushed and 500 500 500 Broken Stone Mining and Quarrying 212321 19 96$4.1 25.5 Construction Sand 500 500 500 and Gravel Mining 212322 Industrial 36 183 66.5 425 Sand Mining 500 500 500 212324 Kaolin and 126 258 80.5 499 Ball Clay Mining 1,250 500 500 212325 Clay and 34 218 48.2 286 Ceramic and 500 500 500 Refractory Minerals Mining 212391 Potash, 245 410 76.0 537 Soda, and Borate 1,500 750 500 Mineral Mining 212392 Phosphate 283 389 Rock Mining 1,500 750 212393 Other 47 170 Chemical and 500 500 Fertilizer Mineral Mining 212399 All Other 21 59 29.0 Nonmetallic 500 500 Mineral Mining 213111 Drilling 59 1,559$9.6 28.4 Oil and Gas Wells 500 1,500 500 221210 Natural 187 1,260$192.6 24.6 Gas Distribution 1,500 1,500 1,500 481111 Scheduled 1,197 18,348$188.6 52.3 51,290 Passenger Air 1,500 1,500 1,500 1,500 Transportation 481112 Scheduled 43 311 53.2 671 Freight Air 500 500 500 Transportation 481211 18 130$4.0 38.9 Nonscheduled 500 500 500 Chartered Passenger Air Transportation 481212 25 535 49.7 568 Nonscheduled 500 1,000 500 Chartered Freight Air Transportation 482111 Line-Haul 2,046 36,622 54.4 111,250 Railroads 1,500 1,500 1,500 482112 Short Line 1,777 38,435 49.6 102,744 Railroads 1,500 1,500 1,500 483111 Deep Sea 55 270 40.0 654 Freight 500 500 500 Transportation 483112 Deep Sea 379 3,322 92.8 4,276 Passenger 1,500 1,500 1,500 Transportation 483113 Coastal 58 302$42.1 28.3 and Great Lakes 500 500 1,500 Freight Transportation 483114 Coastal 20 140 39.6 and Great Lakes 500 500 Passenger Transportation 483211 Inland 53 284$17.6 46.1 1,187 Water Freight 500 500 750 500 Transportation 483212 Inland 12 57 28.1 Water Passenger 500 500 Transportation 486110 Pipeline 146 324$41.9 55.1 917 Transportation of 1,500 500 1,500 500 Crude Oil 486910 Pipeline 113 292 53.3 764 Transportation of 1,000 500 500 Refined Petroleum Products 492110 Couriers 149 63,035$4.5 94.0 119,867 and Express 1,500 1,500 500 1,500 Delivery Services 511110 Newspaper 67 3,938$5.5 29.4 Publishers 750 1,500 500 511120 Periodical 25 373$3.7 26.7 Publishers 500 750 500 511130 Book 37 1,230$6.6 33.4 Publishers 500 1,500 500 511140 Directory 55 1,583$7.0 73.8 8,777 and Mailing List 500 1,500 500 1,500 Publishers 511191 Greeting 138 2,981 90.9 2,512 Card Publishers 1,250 1,500 1,500 511199 All Other 15 254$1.3 33.7 Publishers 500 500 500 512220 Integrated 25 1,451 90.4 1,888 Record 500 1,500 1,250 Production/Distri bution 512230 Music 9 135 57.1 386 Publishers 500 500 500 517110 Wired 255 16,436$69.8 56.8 137,817 Telecommunication 1,500 1,500 1,500 1,500 s Carriers 517210 Wireless 172 10,785$50.9 80.2 55,047 Telecommunication 1,500 1,500 1,500 1,500 s Carriers (except Satellite) 517911 14 117$2.4 30.2 Telecommunication 500 500 500 s Resellers 519130 Internet 23 375$4.0 51.6 5,407 Publishing and 500 750 500 1,500 Broadcasting and Web Search Portals 524126 Direct 241 5,593$358.1 31.9 Property and 1,500 1,500 1,500 Casualty Insurance Carriers 541711 Research 43 413 35.8 and Development 500 750 in Biotechnology 541712 Research 61 942$4.4 21.5 and Development 500 1,500 500 in the Physical, Engineering, and Life Sciences (except Biotechnology)
Table 3--Size Standards Supported by Each Factor for Each Industry (No. of Employees) [Upper Value = Calculated Factor, Lower Value = Size Standard Supported] NAICS Code Gini Federal Calculated Current NAICS industry coefficient contract size size title factor standard standard (%) (number of (number of employees) employees) (1) (7) (8) (9) (10) 113310 Logging 0.332 500 500 500 211111 Crude 0.910 -3.3 Petroleum and 1,500 500 1,250 500 Natural Gas Extraction 211112 Natural 0.702 Gas Liquid 500 750 500 Extraction 212111 Bituminous 0.844 Coal and Lignite 1,500 1,250 500 Surface Mining 212112 Bituminous 0.853 Coal Underground 1,500 1,500 500 Mining 212113 Anthracite 0.429 Mining 500 500 500 212210 Iron Ore 0.716 Mining 500 750 500 212221 Gold Ore 0.896 Mining 1,500 1,500 500 212222 Silver Ore 0.368 Mining 500 750 500 212231 Lead Ore 0.457 and Zinc Ore 500 750 500 Mining 212234 Copper Ore 0.818 and Nickel Ore 1,500 1,500 500 Mining 212291 Uranium- 0.603 Radium-Vanadium 500 500 500 Ore Mining 212299 All Other 0.680 Metal Ore Mining 500 750 500 212311 Dimension 0.463 Stone Mining and 500 500 500 Quarrying 212312 Crushed 0.789 and Broken 1,000 750 500 Limestone Mining and Quarrying 212313 Crushed 0.822 and Broken 1,500 750 500 Granite Mining and Quarrying 212319 Other 0.693 Crushed and 500 500 500 Broken Stone Mining and Quarrying 212321 0.683 Construction Sand 500 500 500 and Gravel Mining 212322 Industrial 0.652 Sand Mining 500 500 500 212324 Kaolin and 0.435 Ball Clay Mining 500 750 500 212325 Clay and 0.637 Ceramic and 500 500 500 Refractory Minerals Mining 212391 Potash, 0.295 Soda, and Borate 500 750 500 Mineral Mining 212392 Phosphate 0.370 Rock Mining 500 1,000 500 212393 Other 0.721 Chemical and 500 500 Fertilizer Mineral Mining 212399 All Other 0.558 Nonmetallic 500 500 500 Mineral Mining 213111 Drilling 0.883 Oil and Gas Wells 1,500 1,000 500 221210 Natural 0.771 -0.1 Gas Distribution 500 500 1,000 500 481111 Scheduled 0.923 Passenger Air 1,500 1,500 1,500 Transportation 481112 Scheduled 0.778 -50.3 Freight Air 750 1,500 750 1,500 Transportation 481211 0.731 -52.2 Nonscheduled 500 1,500 750 1,500 Chartered Passenger Air Transportation 481212 0.820 -81.8 Nonscheduled 1,500 1,500 1,000 1,500 Chartered Freight Air Transportation 482111 Line-Haul 0.898 Railroads 1,500 1,500 1,500 482112 Short Line 0.850 Railroads 1,500 1,500 500 483111 Deep Sea 0.738 -14.8 Freight 500 750 500 500 Transportation 483112 Deep Sea 0.869 Passenger 1,500 1,500 500 Transportation 483113 Coastal 0.750 and Great Lakes 500 750 500 Freight Transportation 483114 Coastal 0.679 and Great Lakes 500 500 500 Passenger Transportation 483211 Inland 0.815 Water Freight 1,500 750 500 Transportation 483212 Inland 0.604 Water Passenger 500 500 500 Transportation 486110 Pipeline 0.360 Transportation of 500 1,000 1,500 Crude Oil 486910 Pipeline 0.198 Transportation of 500 500 1,500 Refined Petroleum Products 492110 Couriers 0.973 7.8 and Express 1,500 1,500 1,250 1,500 Delivery Services 511110 Newspaper 0.929 Publishers 1,500 1,000 500 511120 Periodical 0.861 -14.0 Publishers 1,500 750 1,000 500 511130 Book 0.898 Publishers 1,500 1,000 500 511140 Directory 0.915 and Mailing List 1,500 1,250 500 Publishers 511191 Greeting 0.947 Card Publishers 1,500 1,500 500 511199 All Other 0.726 -5.2 Publishers 500 500 500 500 512220 Integrated 0.947 Record 1,500 1,250 750 Production/Distri bution 512230 Music 0.862 Publishers 1,500 750 500 517110 Wired 0.961 20.2 Telecommunication 1,500 1,500 1,500 1,500 s Carriers 517210 Wireless 0.976 10.0 Telecommunication 1,500 1,500 1,500 1,500 s Carriers (except Satellite) 517911 0.731 -69.5 Telecommunication 500 1,500 750 1,500 s Resellers 519130 Internet 0.889 Publishing and 1,500 1,000 500 Broadcasting and Web Search Portals 524126 Direct 0.934 Property and 1,500 1,500 1,500 Casualty Insurance Carriers 541711 Research 0.802 -16.4 and Development 1,250 750 1,000 500 in Biotechnology 541712 Research 0.814 -2.2 and Development 1,500 500 1,000 500 in the Physical, Engineering, and Life Sciences (except Biotechnology)
Special Considerations
The Information Technology Value Added Resellers Sub-Industry ("Exception") Under NAICS 541519, Other Computer Related Services
For Federal contracts that combine substantial services with the acquisition of computer hardware and software, in 2002, SBA proposed to establish a new industry category "Information Technology Value Added Resellers (ITVAR)" under NAICS 541519, Other Computer Related Services, with a size standard of 500 employees (67 FR 48419 (
As stated in Footnote 18 to SBA's table of size standards, for a Federal contract to be classified under the ITVAR sub-industry or "exception" and its 150-employee size standard, it must consist of at least 15 percent but not more than 50 percent of value added services as measured by the total price less cost of computer hardware and software, and profit. If the contract consists of less than 15 percent of value added services, it must be classified under the appropriate manufacturing industry. If the contract consists of more than 50 percent of value added services, it must be classified under the NAICS industry that best describes the principal nature of service being procured.
SBA is proposing to eliminate the ITVAR 150-employee size standard exception under NAICS 541519 because it has created some inconsistencies, confusion, and misuse. First, contracting officers are not able to identify size standard exceptions in the FPDS-NG. Thus, the public often believes that a firm that received a contract as a small business under NAICS 541519 and has revenue in excess of the
Moreover, the use of the ITVAR exception size standard is also purely discretionary. Under the terms of the exception as stated in Footnote 18 in SBA's table of size standards, it is clear that the majority of the cost of the contract that qualify under the ITVAR 150-employee size standard will be incurred for supplies. Thus, instead of using the ITVAR 150-employee size standard under NAICS 541519, a contracting officer could use a manufacturing NAICS code and size standard, such as NAICS 334111 (Electronic Computer Manufacturing) with 1,000-employee size standard, to which the non-manufacturer size standard of 500 employees would also apply. Thus, firms may or may not be eligible as a small business for the exact same purchase simply based on the contracting officer's selection of the NAICS code and size standard. This is inconsistent with SBA's small business regulations that the contracting officer must select the NAICS code that best describes the principal purpose of the acquisition (see 13 CFR 121.402(b)). The selection of a NAICS code should never be based on the contracting officer's desire for a particular size standard or firm size.
In addition, the combination of services and supplies in an acquisition is not unique to the information technology industry. Acquisitions across many industries combine supplies and services, yet SBA has not created exceptions to the size standards for these industries. The general principle is that agencies classify procurements based on the principal purpose of the acquisition. Based on the analysis of available industry and Federal contracting data for
For these reasons, SBA proposes to eliminate the ITVAR sub-industry category ("exception") under NAICS 541519 and its 150-employee size standard and apply only the
SBA's analysis of 2007 Economic Census data shows that 150 employees is more or less equivalent to
In view of the proposed elimination of the ITVAR exception under NAICS 541519, SBA also proposes to eliminate Footnote 18 in its entirety from SBA's table of size standards.
Exceptions Under NAICS 541712, Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)
NAICS 541712, Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology), has three sub-industries or "exceptions". As stated in Footnote 11 to SBA's table of size standards, for research and development (R&D) contracts requiring the delivery of a manufactured product, the appropriate size standard is that of the corresponding manufacturing industry. The three "exceptions" under NAICS 541712 and their corresponding manufacturing industry counterparts and their size standards are shown in Table 4, NAICS 541712
Table 4--NAICS 541712Exceptions and Corresponding Manufacturing Industries and Size Standards Exception NAICS code and Current size Calculated size industry title standard standard (number of (number of employees) employees) *1 Aircraft 336411 Aircraft 1,500 1,500 Manufacturing Aircraft Parts and 336412 Aircraft 1,000 1,500 Auxiliary Engine and Engine Equipment, and Parts Aircraft Engine Manufacturing Parts 336413 Other 1,000 1,250 Aircraft Part and Auxiliary Equipment Space Vehicles and 336414 Guided 1,000 1,250 Guided Missiles, Missile and Space Their Propulsion Vehicle Units Parts, and Manufacturing Their Auxiliary Equipment and Parts 336415 Guided 1,000 1,250 Missile and Space Vehicle Propulsion Unit and Propulsion Parts Manufacturing 336419 Other 1,000 1,000 Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing *1 From Table 3 of the proposed rule "Small Business Size Standards for Manufacturing" (RIN 3245-AG50), published concurrently in the current issue of theFederal Register .
To better match the exceptions to the corresponding calculated industry specific size standards in manufacturing, SBA proposes to modify the three exceptions as shown in Table 5, Modified Exceptions and Their Proposed Size Standards, below.
Table 5--Modified Exceptions and Their Proposed Size Standards Current Proposed Exception Size standard Exception Size standard (number of (number of employees) employees) Aircraft 1,500 Aircraft, Aircraft 1,500 Engine, and Engine Parts Aircraft Parts and 1,000 Other Aircraft 1,250 Auxiliary Parts and Equipment, and Auxiliary Aircraft Engine Equipment Parts Space Vehicles and 1,000 Guided Missiles 1,250 Guided Missiles, and Space Their Propulsion Vehicles, Their Units Parts, and Propulsion Units Their Auxiliary and Propulsion Equipment and Parts Parts
Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment category has been dropped from the third exception because the proposed size standard for the corresponding manufacturing industry (NAICS 336419) is the same as the calculated size standard for rest of NAICS 541712.
Footnote 11 to SBA's table of size standards concerning NAICS codes 541711and 541712 consists of an introductory paragraph and three sub-paragraphs numbered as (a), (b), and (c). The introductory paragraph states that for research and development contracts requiring the delivery of a manufactured product, the appropriate size standard is that of the manufacturing industry. Sub-paragraph (a) concerns with what SBA generally means by "Research and Development" (R&D) under NAICS codes 541712 and 541712, while sub-paragraph (b) and (c) relate to the R&D definitions for
11 NAICS code 541711 and 541712:
(a) "Research and Development" means laboratory or other physical research and development. It does not include economic, educational, engineering, operations, systems, or other nonphysical research; or computer programming, data processing, commercial and/or medical laboratory testing.
(b) For research and development contracts requiring the delivery of a manufactured product, the appropriate size standard is that of the manufacturing industry.
(c) For purposes of the
(d) "Research and Development" for guided missiles and space vehicles includes evaluations and simulation, and other services requiring thorough knowledge of complete missiles and spacecraft.
The Environmental Remediation Services Sub-Industry ("Exception") Under NAICS 562910, Remediation Services
In 1994, SBA established a 500-employee based size standard for Environmental Remediation Services (ERS) for Federal procurements involving three or more services related to restoring a contaminated environment, such as preliminary assessment, site inspection, testing, remedial investigation, remedial action, containment, and removal and storage of contaminated materials (FR 59 47236 (
As explained previously in the Sources of Industry and Program Data section, the data from the
The ERS contracts were predominantly classified under the three PSCs as shown in Table 6, PSCs for ERS Contracts, below.
Table 6--PSCs for ERS Contracts PSC PSC Description F108 Environmental Systems Protection--Environmental Remediation Includes: Toxic and Hazardous Substance Removal, Cleanup, and Disposal; Asbestos and Lead Abatement. Excludes: Remediation of Oil Spills (PSC F112). F112 Environmental Systems Protection--Oil Spill Response Includes: Cleanup, Removal, Disposal and Operational Support. F999 Other Environmental Services.
Among these three PSCs, F108 and F999 accounted for about 98 percent of nearly
Table 7--Size Standards Supported by Each Factor for the ERS Sub-Industry (No. of Employees) Simple Weighted Average assets Four-firm average average firm size ratio % firm size size (number ( $million) (number of of employees) employees) Factor 832 20,583 NA 47 Size standard 1,500 1,500 NA = data not available.
Table 7--Size Standards Supported by Each Factor for the ERS Sub-Industry (No. of Employees) Four-firm Gini coeffi- Federal Calculated average size cient contract size (number of factor (%) standard employees) (number of employees) Factor 48,022 0.9298 37.5 Size standard 1,500 1,500 500 1,250 NA = data not available.
Based on the above results, SBA is proposing to increase the size standard for the ERS sub-industry or exception under NAICS 562910 from the current 500 employees to 1,250 employees.
Offshore Marine Air Transportation Services is a sub-industry or "exception" under both NAICS 481211, Nonscheduled Chartered Passenger Air Transportation and NAICS 481212, Nonscheduled Chartered Freight Air Transportation. The size standards are 1,500 employees for both NAICS codes 481211 and 481212 and
As mentioned earlier, the data from the
The sub-industry or "exception" size standards are primarily used for Federal government procurements of very specific products or services within a 6-digit NAICS industry and many of them account for a significant share of contract dollars within the industry. However, evaluations of data from FPDS-NG and a sample of solicitations from the Federal Business Opportunities Web site at www.fbo.gov show almost no federal contract awards to small businesses under the
For the above reasons, SBA proposes to eliminate these sub-industries or "exceptions" and their
Proposed Changes to Size Standards
Table 8, Summary of Size Standards Analysis, below, summarizes the results of SBA's analyses from Table 3, Size Standards Supported by Each Factor for Each Industry (No. of employees). The results might support increases in size standards for 31 industries, decreases for seven industries and no change for 19 industries.
Table 8--Summary of Size Standards Analysis NAICS Code NAICS Industry title Current size Calculated standard size standard (number of (number of employees) employees) 113310 Logging 500 500 211111 Crude Petroleum and Natural Gas 500 1,250 Extraction 211112 Natural Gas Liquid Extraction 500 750 212111 Bituminous Coal and Lignite Surface 500 1,250 Mining 212112 Bituminous Coal Underground Mining 500 1,500 212113 Anthracite Mining 500 500 212210 Iron Ore Mining 500 750 212221 Gold Ore Mining 500 1,500 212222 Silver Ore Mining 500 750 212231 Lead Ore and Zinc Ore Mining 500 750 212234 Copper Ore and Nickel Ore Mining 500 1,500 212291 Uranium-Radium-Vanadium Ore Mining 500 500 212299 All Other Metal Ore Mining 500 750 212311 Dimension Stone Mining and Quarrying 500 500 212312 Crushed and Broken Limestone Mining 500 750 and Quarrying 212313 Crushed and Broken Granite Mining and 500 750 Quarrying 212319 Other Crushed and Broken Stone Mining 500 500 and Quarrying 212321 Construction Sand and Gravel Mining 500 500 212322 Industrial Sand Mining 500 500 212324 Kaolin and Ball Clay Mining 500 750 212325 Clay and Ceramic and Refractory 500 500 Minerals Mining 212391 Potash, Soda, and Borate Mineral 500 750 Mining 212392 Phosphate Rock Mining 500 1,000 212393 Other Chemical and Fertilizer Mineral 500 500 Mining 212399 All Other Nonmetallic Mineral Mining 500 500 213111 Drilling Oil and Gas Wells 500 1,000 221210 Natural Gas Distribution 500 1,000 481111 Scheduled Passenger Air 1,500 1,500 Transportation 481112 Scheduled Freight Air Transportation 1,500 750 481211 Nonscheduled Chartered Passenger Air 1,500 750 Transportation 481212 Nonscheduled Chartered Freight Air 1,500 1,000 Transportation 482111 Line-Haul Railroads 1,500 1,500 482112 Short Line Railroads 500 1,500 483111 Deep Sea Freight Transportation 500 500 483112 Deep Sea Passenger Transportation 500 1,500 483113 Coastal and Great Lakes Freight 500 750 Transportation 483114 Coastal and Great Lakes Passenger 500 500 Transportation 483211 Inland Water Freight Transportation 500 750 483212 Inland Water Passenger Transportation 500 500 486110 Pipeline Transportation of Crude Oil 1,500 1,000 486910 Pipeline Transportation of Refined 1,500 500 Petroleum Products 492110 Couriers and Express Delivery 1,500 1,250 Services 511110 Newspaper Publishers 500 1,000 511120 Periodical Publishers 500 1,000 511130 Book Publishers 500 1,000 511140 Directory and Mailing List Publishers 500 1,250 511191 Greeting Card Publishers 500 1,500 511199 All Other Publishers 500 500 512220 Integrated Record 750 1,250 Production/Distribution 512230 Music Publishers 500 750 517110 Wired Telecommunications Carriers 1,500 1,500 517210 Wireless Telecommunications Carriers 1,500 1,500 (except Satellite) 517911 Telecommunications Resellers 1,500 750 519130 Internet Publishing and Broadcasting 500 1,000 and Web Search Portals 524126 Direct Property and Casualty 1,500 1,500 Insurance Carriers 541711 Research and Development in 500 1,000 Biotechnology 541712 Research and Development in the 500 1,000 Physical, Engineering, and Life Sciences (except Biotechnology)
Similarly, the results discussed under the Special Considerations section, above, support increasing the size standard for the second and third exceptions and retaining it for the first exception under NAICS 541712 and increasing the Environmental Remediation Services exception under NAICS 562910. SBA is proposing to eliminate the Information Technology Value Added Resellers exception and its 150-employee size standard under NAICS 541519. SBA is also proposing to eliminate the
To ensure that neither an existing nor a calculated size standard includes the largest or dominant firms in any industry, besides the calculation of the Gini coefficient, SBA further assessed the distribution of firms in each industry by employee size. The analytical results in Table 3 might appear to support retaining the existing size standard of 500 employees for NAICS codes 212113 and 212291 and increasing it to 750 employees for NAICS 212222. However, the firm size distribution showed that these levels would include all firms, including the largest and possibly dominant ones, as small in each of those industries. Moreover, these levels are almost the same as or higher than the total employees for the entire industry. Accordingly, SBA is proposing to set the size standard for each of these three NAICS codes at 250 employees. This would affect only the one or two largest firms in each of those industries.
Except for lowering size standards to exclude the dominant firms, SBA believes that lowering size standards is not in the best interest of small businesses in the current economic environment. The U.S. economy was in recession from
In 2010,
Lowering size standards would decrease the number of firms that participate in Federal financial and procurement assistance programs for small businesses. It would also affect small businesses that are now exempt or receive some form of relief from other Federal regulations that use SBA's size standards. That impact could take the form of increased fees, paperwork, or other compliance requirements for small businesses. Furthermore, size standards based solely on analytical results without any other considerations can cut off currently eligible small firms from those programs and benefits. In the seven industries for which analytical results might have supported lowering their size standards, about 40 businesses would lose their small business eligibility if their size standards were lowered based solely on the analytical results. That would run counter to what SBA and the Federal government are doing to help small businesses and create jobs. Reducing size eligibility for Federal procurement opportunities, especially under current economic conditions, would not preserve or create more jobs; rather, it would have the opposite effect. Therefore, in this proposed rule, except for three industries for which SBA is proposing to lower their size standards to exclude the largest and possibly the dominant firms from being small, SBA does not intend to reduce size standards for any industries. Accordingly, for seven industries where analyses might seem to support lowering size standards, SBA proposes to retain the current size standards.
Furthermore, as stated previously, the Small Business Act requires the SBA's Administrator to ". . . consider other factors deemed to be relevant . . ." to establishing small business size standards. The current economic conditions and the impact on job creation are quite relevant factors when establishing small business size standards. SBA nevertheless invites comments and suggestions on whether it should lower size standards as suggested by analyses of industry and program data or retain the current standards for those industries in view of current economic conditions.
As discussed above, except to exclude the largest or dominant firms, lowering size standards is inconsistent with what the Federal government is doing to stimulate the economy and would discourage job growth for which
Table 9--Summary of Proposed Size Standards Revisions NAICS Code NAICS Industry Current size Current size Proposed size title standard standard standard (millions of (number of (number of dollars) employees) employees) 211111 Crude 500 1,250 Petroleum and Natural Gas Extraction 211112 Natural Gas 500 750 Liquid Extraction 212111 Bituminous 500 1,250 Coal and Lignite Surface Mining 212112 Bituminous 500 1,500 Coal Underground Mining 212113 Anthracite 500 250 Mining 212210 Iron Ore 500 750 Mining 212221 Gold Ore 500 1,500 Mining 212222 Silver Ore 500 250 Mining 212231 Lead Ore and 500 750 Zinc Ore Mining 212234 Copper Ore and 500 1,500 Nickel Ore Mining 212291 Uranium- 500 250 Radium- Vanadium Ore Mining 212299 All Other 500 750 Metal Ore Mining 212312 Crushed and 500 750 Broken Limestone Mining and Quarrying 212313 Crushed and 500 750 Broken Granite Mining and Quarrying 212324 Kaolin and 500 750 Ball Clay Mining 212391 Potash, Soda, 500 750 and Borate Mineral Mining 212392 Phosphate Rock 500 1,000 Mining 213111 Drilling Oil 500 1,000 and Gas Wells 221210 Natural Gas 500 1,000 Distribution 481211 Except$30.5 Eliminate 481212 Except$30.5 Eliminate 482112 Short Line 500 1,500 Railroads 483112 Deep Sea 500 1,500 Passenger Transportation 483113 Coastal and 500 750 Great Lakes Freight Transportation 483211 Inland Water 500 750 Freight Transportation 511110 Newspaper 500 1,000 Publishers 511120 Periodical 500 1,000 Publishers 511130 Book 500 1,000 Publishers 511140 Directory and 500 1,250 Mailing List Publishers 511191 Greeting Card 500 1,500 Publishers 512220 Integrated 750 1,250 Record Production/Dis tribution 512230 Music 500 750 Publishers 519130 Internet 500 1,000 Publishing and Broadcasting and Web Search Portals 541519 Except Information 150 Eliminate Value Added Resellers 541711 Research and 500 1,000 Development in Biotechnology 541712 Research and 500 1,000 Development in the Physical, Engineering, and Life Sciences (except Biotechnology) Except Aircraft 1,000 1,500 Engine and Engine Parts Except Other Aircraft 1,000 1,250 Parts and Auxiliary Equipment Except Guided 1,000 1,250 Missiles and Space Vehicles, Their Propulsion Units and Propulsion Parts 562910 Except Environmental 500 1,250 Remediation Services
Maintaining current size standards when the analytical results suggested lowering them is consistent with SBA's recent final rules on NAICS Sector 44-45, Retail Trade (75 FR 61597 (
Evaluation of Dominance in Field of Operation
SBA has determined that for the industries for which it has proposed revising size standards in this rule, no individual firm at or below the proposed size standard will be large enough to dominate its field of operation. At the proposed size standards, if adopted, the small business share of total industry receipts among those industries is, in average, 3.4 percent, with an interval showing a minimum of less than 0.01 percent to a maximum of 20.0 percent. These market shares effectively preclude a firm at or below the proposed size standards from exerting control over any of the industries.
Request for Comments
SBA invites public comments on this proposed rule, especially on the following issues:
1. SBA proposes five levels of employee based size standards for industries in Manufacturing and industries in other Sectors except for Wholesale Trade and Retail Trade that have employee based size standards: 500 employees, 750 employees, 1,000 employees, 1,250 employees, and 1,500 employees. SBA invites comments on whether these proposed size levels are appropriate and suggestions on alternative levels, if they would be more appropriate.
2. To be consistent with its policy of not lowering any size standards in all recent proposed and final rules on receipts based size standards in view of current economic conditions, SBA is retaining the current 500-employee minimum and 1,500-employee maximum size standards for all industries in the Manufacturing Sector and other industries not in the Wholesale and Retail Trade Sectors that have employee based size standards. In its "Size Standards Methodology," available at www.sba.gov/size, SBA had proposed setting the minimum size standard for these industries at 250 employees and the maximum size standard at 1,000 employees. This would have resulted in lowering the existing employee based size standards for some industries. SBA invites comments on whether should SBA maintain the minimum employee based size standard at 500 employees and the maximum at 1,500 employees or should it lower them to 250 employees and 1,000 employees, respectively, as proposed in "Size Standards Methodology", and suggestions on alternative minimum and maximum levels, if they would be more appropriate. SBA also seeks feedback on whether it should adjust employee based size standards for labor productivity growth.
3. SBA seeks feedback on whether SBA's proposal to increase size standards for 30 industries and three sub-industries, reduce size standards for three industries to exclude the largest firms, and retain current size standards for 24 industries and one sub-industry is appropriate, given the economic characteristics of each industry and sub-industry reviewed in this proposed rule. SBA also seeks feedback and suggestions on alternative size standards, if they would be more appropriate, including whether the average annual revenue is a more suitable measure of size for certain industries and what that revenue level should be.
4. SBA invites comments on its proposal to eliminate the Information Technology Value Added Resellers sub-industry or exception under NAICS 541519 (Other Computer Related Services) and its 150-employee size standard and apply the
5. SBA invites comments on its proposal to eliminate the
6. SBA has proposed to retain the current size standards for seven industries for which its analysis would support lowering them. SBA seeks comments on whether SBA should lower them solely based on its analysis or retain them at their current levels in view of current economic conditions.
7. SBA's proposed size standards are based on five primary factors--average firm size, average assets size (as a proxy of startup costs and entry barriers), four-firm concentration ratio, distribution of firms by size and, the level and small business share of Federal contracting dollars of the evaluated industries and sub-industries. SBA welcomes comments on these factors and/or suggestions on other factors that it should consider when evaluating or revising employee based size standards. SBA also seeks information on relevant data sources, other than what it uses, if available.
8. SBA gives equal weight to each of the five primary factors in all industries. SBA seeks feedback on whether it should continue giving equal weight to each factor or whether it should give more or less weight to one or more factors for certain industries. Recommendations to weigh some factors more than others should include suggested weights for each factor along with supporting information.
9. For analytical simplicity and efficiency, in this proposed rule, SBA has refined its size standard methodology to obtain a single value as a proposed size standard instead of a range of values, as in its past size regulations. SBA welcomes any comments on this procedure and suggestions on alternative methods.
Public comments on the above issues are very valuable to SBA for validating its size standard methodology and its proposed size standards revisions in this proposed rule. This will help SBA to ensure that size standards reflect industry structure and Federal market conditions. Commenters addressing SBA's proposed size standard revisions for a specific industry or a group of industries should include relevant data and/or other information supporting their comments. If comments relate to using 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, startup 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, 13563, 12988 and 13132, the Paperwork Reduction Act (44 U.S.C. Ch. 35) and the Regulatory Flexibility Act (5 U.S.C. 601-612)
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. However, this rule is not a "major rule" under the Congressional Review Act, 5 U.S.C. 800.
Regulatory Impact Analysis
1. Is there a need for the regulatory action?
SBA believes that proposed size standards revisions in this proposed rule will better reflect the economic characteristics of small businesses in the affected industries and the Federal government marketplace. SBA's mission is to aid and assist small businesses through a variety of financial, procurement, business development, and advocacy programs. To determine the intended beneficiaries of these programs, SBA establishes distinct definitions of which businesses are deemed small businesses. The Small Business Act (15 U.S.C. 632(a)) delegates to SBA's Administrator the responsibility for establishing small business definitions. The Act also requires that small business definitions vary to reflect industry differences. The Jobs Act also requires SBA to review all size standards and make necessary adjustments to reflect market conditions. The supplementary information section of this proposed rule explains SBA's methodology for analyzing a size standard for a particular industry.
2. What are the potential benefits and costs of this regulatory action?
The most significant benefit to businesses obtaining small business status because of this proposed rule is gaining or retaining eligibility for Federal small business assistance programs. These include SBA's financial assistance programs, economic injury disaster loans, and Federal procurement programs intended for small businesses. Federal procurement programs provide targeted opportunities for small businesses under SBA's business development programs, such as 8(a), Small Disadvantaged Businesses (SDB), small businesses located in Historically Underutilized Business Zones (HUBZone), women-owned small businesses (WOSB), economically disadvantaged women-owned small businesses (EDWOSB), and service-disabled veteran-owned small businesses (SDVOSB). Federal agencies may also use SBA's size standards for a variety of other regulatory and program purposes. These programs assist small businesses to become more knowledgeable, stable, and competitive. SBA estimates that in 30 industries and three sub-industries ("exceptions") for which it has proposed to increase size standards more than 380 firms, not small under the existing size standards, will become small under the proposed size standards, if adopted, and therefore become eligible for these programs. That is about 0.6 percent of all firms classified as small under the current size standards in all industries and sub-industries reviewed in this proposed rule. If adopted as proposed, this will increase the small business share of total receipts in those industries from 18.3 percent to 21.3 percent. In three industries for which SBA has proposed to reduce their size standards, only the one or two largest firms will be impacted in each of those industries.
Three groups will benefit from the proposed size standards revisions in this rule, if they are adopted as proposed: (1) Some businesses that are above the current size standards may gain small business status under the higher size standards, thereby enabling them to participate in Federal small business assistance programs; (2) growing small businesses that are close to exceeding the current size standards will be able to retain their small business status under the higher size standards, thereby enabling them to continue their participation in the programs; and (3) Federal agencies will have a larger pool of small businesses from which to draw for their small business procurement programs.
SBA estimates that firms gaining small business status under the proposed size standards could receive Federal contracts totaling
Under SBA's 7(a) and 504 Loan Programs, based on the fiscal years 2010-2012 data, SBA estimates up to about five SBA's 7(a) and 504 loans totaling about
Newly defined small businesses will also benefit from SBA's Economic Injury Disaster Loan (EIDL) Program. 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.
In addition, newly defined small businesses will also benefit through reduced fees, less paperwork, and fewer compliance requirements that are available to small businesses through Federal government.
To the extent that those 380 newly defined additional small firms could become active in Federal procurement programs, the proposed changes to size standards, if adopted, may entail some additional administrative costs to the government as a result of more businesses being eligible for Federal small business programs. For example, there will be more firms seeking SBA's guaranteed loans, more firms eligible for enrollment in the System of Award Management (SAM) database, and more firms seeking certification as 8(a) or HUBZone firms or qualifying for small business, WOSB, EDWOSB, SDVOSB, and SDB status. Among those newly defined small businesses seeking SBA's assistance, there could be some additional costs associated with compliance and verification of small business status and protests of small business status. However, SBA believes that these added administrative costs will be minimal because mechanisms are already in place to handle these requirements.
Additionally, Federal government contracts may have higher costs. With a greater number of businesses defined as small, Federal agencies may choose to set aside more contracts for competition among small businesses only rather than using full and open competition. The movement from unrestricted to small business set-aside contracting might result in competition among fewer total bidders, although there will be more small businesses eligible to submit offers. However, the additional costs associated with fewer bidders are expected to be minor since, by law, procurements may be set aside for small businesses or reserved for the 8(a), HUBZone, WOSB, EDWOSB, or SDVOSB Programs only if awards are expected to be made at fair and reasonable prices. In addition, there may be higher costs when more full and open contracts are awarded to HUBZone businesses that receive price evaluation preferences.
The proposed size standards revisions, if adopted, may have some distributional effects among large and small businesses. Although SBA cannot estimate with certainty the actual outcome of the gains and losses among small and large businesses, it can identify several probable impacts. There may be a transfer of some Federal contracts to small businesses from large businesses. Large businesses may have fewer Federal contract opportunities as Federal agencies decide to set aside more contracts for small businesses. In addition, some Federal contracts may be awarded to HUBZone concerns instead of large businesses since these firms may be eligible for a price evaluation preference for contracts when they compete on a full and open basis.
Similarly, some businesses defined small under the current size standards may obtain fewer Federal contracts due to the increased competition from more businesses defined as small under the proposed size standards. This transfer may be offset by a greater number of Federal procurements set aside for all small businesses. The number of newly defined and expanding small businesses that are willing and able to sell to the Federal Government will limit the potential transfer of contracts from large and currently defined small businesses. SBA cannot estimate the potential distributional impacts of these transfers with any degree of precision.
The proposed revisions to the existing employee based size standards for 33 industries and three sub-industries are consistent with SBA's statutory mandate to assist small business. This regulatory action promotes the Administration's objectives. One of SBA's goals in support of the Administration's objectives is to help individual small businesses succeed through fair and equitable access to capital and credit, Government contracts, and management and technical assistance. Reviewing and modifying size standards, when appropriate, ensures that intended beneficiaries have access to small business programs designed to assist them.
Executive Order 13563
Descriptions 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 are included above in the Regulatory Impact Analysis under Executive Order 12866.
In an effort to engage interested parties in this action, SBA has presented its size standards methodology (discussed above under Supplementary Information) to various industry associations and trade groups. SBA also met with a number of industry groups and individual businesses to get their feedback on its methodology and other size standards issues. In addition, SBA presented its size standards methodology to businesses in 13 cities in the U.S. and sought their input as part of Jobs Act tours. The presentation also included information on the latest status of the comprehensive size standards review and on how interested parties can provide SBA with input and feedback on size standards review.
Additionally, SBA sent letters to the Directors of the Offices of Small and Disadvantaged Business Utilization (OSDBU) at several Federal agencies with considerable procurement responsibilities requesting their feedback on how the agencies use SBA's size standards and whether current size standards meet their programmatic needs (both procurement and non-procurement). SBA gave appropriate consideration to all input, suggestions, recommendations, and relevant information obtained from industry groups, individual businesses, and Federal agencies in preparing this proposed rule.
The review of size standards in industries and sub-industries covered in this proposed rule is consistent with Executive Order 13563, Section 6, calling for retrospective analyses of existing rules. The last comprehensive review of size standards occurred during the late 1970s and early 1980s. Since then, except for periodic adjustments for monetary based size standards, most reviews of size standards were limited to a few specific industries in response to requests from the public and Federal agencies. The majority of employee based size standards have not been reviewed since they were first established. SBA recognizes that changes in industry structure and the Federal marketplace over time have rendered existing size standards for some industries no longer supportable by current data. Accordingly, in 2007, SBA began a comprehensive review of its size standards to ensure that existing size standards have supportable bases and to revise them when necessary. In addition, the Jobs Act requires SBA to conduct a detailed review of all size standards and to make appropriate adjustments to reflect market conditions. Specifically, the Jobs Act requires SBA to conduct a detailed review of at least one-third of all size standards during every 18-month period from the date of its enactment and do a complete review of all size standards not less frequently than once every 5 years thereafter.
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 will not impose any new reporting or record keeping requirements.
Initial Regulatory Flexibility Analysis
Under the Regulatory Flexibility Act (RFA), this proposed rule, if adopted, may have a significant impact on a substantial number of small businesses in the industries and sub-industries covered by this rule. As described above, this rule may affect small businesses seeking Federal contracts, loans under SBA's 7(a), 504 and Economic Injury Disaster Loan 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 are the need for and objective of the rule? (2) What are 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 are 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 industries reviewed in this proposed rule. Such changes can be sufficient 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 Jobs Act also requires SBA to review all size standards and make necessary adjustments to reflect market conditions.
2. What are SBA's description and estimate of the number of small businesses to which the rule will apply?
If the proposed rule is adopted in its present form, SBA estimates that about 380 additional firms will become small because of increased size standards for 30 industries and three sub-industries not in NAICS Sectors 31-33, 42 and 44-45. That represents 0.6 percent of total firms that are small under current size standards in all industries reviewed by SBA in this proposed rule. This will result in an increase in the small business share of total industry receipts for those industries from 18.3 percent under the current size standards to 21.3 percent under the proposed size standards. In the three industries for which SBA has proposed to reduce their size standards, only the one or two largest firms will be impacted in each of those industries. The proposed size standards, if adopted, will enable more small businesses to retain their small business status for a longer period. Many firms may have lost their eligibility and find it difficult to compete at current size standards with companies that are significantly larger than they are. SBA believes the competitive impact will be positive for existing small businesses and for those that exceed the size standards but are on the very low end of those that are not small. They might otherwise be called or referred to as mid-sized businesses, although SBA only defines what is small; other entities are other than 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 the SAM database and certify in SAM that they are small at least once annually. Therefore, businesses opting to participate in those programs must comply with SAM requirements. However, there are no 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, which may duplicate, overlap or conflict with the rule?
Under SEC 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
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
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.
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 part 13 CFR part 121 as follows:
PART 121--SMALL BUSINESS SIZE REGULATIONS
1. The authority citation for Part 121 continues to read as follows:
Authority: 15 U.S.C. 632, 634(b)(6), 662, and 694a(9).
2. In
a. Revise the entries for "211111", "211112", "212111", "212112", "212113", "212210", "212221", "212222", "212231", "212234", "212291", "212299", "212312", "212313", "212324", "212391", "212392", "213111", "221210", "482112", "483112", "483113", "483211", "511110", "511120", "511130", "511140", "511191", "512220", "512230", "519130", "541711", "541712 introductory entry and first, second and third sub-entry, and "562910 sub-entry".
b. Amend the entry for "481211" by removing its sub-entry "Except," "
c. Amend the entry for "481212" by removing the sub-entry "Except," "
d. Amend the entry for "541519" by removing the subentry "Except," "Value Added Resellers 18", "150 18".
e. Revise Footnote 11.
f. Remove and reserve Footnote 15.
g. Remove and reserve Footnote 18.
h. Footnote 14 is republished.
The revisions read as follows:
* * * * *
Small Business Size Standards by NAICS Industry NAICS NAICS U.S. Industry title Size Size Codes standards in standards in millions of number of dollars employees * * * * * * * 211111 Crude Petroleum and Natural Gas 1,250 Extraction 211112 Natural Gas Liquid Extraction 750 * * * * * * * 212111 Bituminous Coal and Lignite Surface 1,250 Mining 212112 Bituminous Coal Underground Mining 1,500 212113 Anthracite Mining 250 212210 Iron Ore Mining 750 212221 Gold Ore Mining 1,500 212222 Silver Ore Mining 250 212231 Lead Ore and Zinc Ore Mining 750 212234 Copper Ore and Nickel Ore Mining 1,500 212291 Uranium-Radium-Vanadium Ore Mining 250 212299 All Other Metal Ore Mining 750 * * * * * * * 212312 Crushed and Broken Limestone Mining 750 and Quarrying 212313 Crushed and Broken Granite Mining 750 and Quarrying * * * * * * * 212324 Kaolin and Ball Clay Mining 750 * * * * * * * 212391 Potash, Soda, and Borate Mineral 750 Mining 212392 Phosphate Rock Mining 1,000 * * * * * * * 213111 Drilling Oil and Gas Wells 1,000 * * * * * * * 221210 Natural Gas Distribution 1,000 * * * * * * * 481211 Nonscheduled Chartered Passenger 1,500 Air Transportation 481212 Nonscheduled Chartered Freight Air 1,500 Transportation * * * * * * * 482112 Short Line Railroads 1,500 Subsector 483--Water Transportation * * * * * * * 483112 Deep Sea Passenger Transportation 1,500 483113 Coastal and Great Lakes Freight 750 Transportation * * * * * * * 483211 Inland Water Freight Transportation 750 * * * * * * * 511110 Newspaper Publishers 1,000 511120 Periodical Publishers 1,000 511130 Book Publishers 1,000 511140 Directory and Mailing List 1,250 Publishers 511191 Greeting Card Publishers 1,500 * * * * * * * 512220 Integrated Record 1,250 Production/Distribution 512230 Music Publishers 750 * * * * * * * 519130 Internet Publishing and 1,000 Broadcasting and Web Search Portals * * * * * * * 541711 Research and Development in *11 1,000 Biotechnology *11 541712 Research and Development in the *11 1,000 Physical, Engineering, and Life Sciences (except Biotechnology) *11 Except Aircraft, Aircraft Engine, and 1,500 Engine Parts Except Other Aircraft Parts and Auxiliary 1,250 Equipment Except Guided Missiles and Space Vehicles, 1,250 Their Propulsion Units and Propulsion Parts * * * * * * * 562910 Remediation Services$19.0 Except Environmental Remediation Services *14 1,250 *14 * * * * * * *
.
Footnotes
* * * * *
11. NAICS code 541711 and 541712:
(a) "Research and Development" means laboratory or other physical research and development. It does not include economic, educational, engineering, operations, systems, or other nonphysical research; or computer programming, data processing, commercial and/or medical laboratory testing.
(b) For research and development contracts requiring the delivery of a manufactured product, the appropriate size standard is that of the manufacturing industry.
(c) For purposes of the Small Business Innovation Research (SBIR) program only, a different definition has been established by law. See
(d) "Research and Development" for guided missiles and space vehicles includes evaluations and simulation, and other services requiring thorough knowledge of complete missiles and spacecraft.
* * * * *
14. NAICS 562910--Environmental Remediation Services:
(a) For SBA assistance as a small business concern in the industry of Environmental Remediation Services, other than for Government procurement, a concern must be engaged primarily in furnishing a range of services for the remediation of a contaminated environment to an acceptable condition including, but not limited to, preliminary assessment, site inspection, testing, remedial investigation, feasibility studies, remedial design, containment, remedial action, removal of contaminated materials, storage of contaminated materials and security and site closeouts. If one of such activities accounts for 50 percent or more of a concern's total revenues, employees, or other related factors, the concern's primary industry is that of the particular industry and not the Environmental Remediation Services Industry.
(b) For purposes of classifying a Government procurement as Environmental Remediation Services, the general purpose of the procurement must be to restore or directly support the restoration of a contaminated environment. This includes activities such as preliminary assessment, site inspection, testing, remedial investigation, feasibility studies, remedial design, remediation services, containment, and removal of contaminated materials or security and site closeouts. The general purpose of the procurement need not necessarily include remedial actions. Also, the procurement must be composed of activities in three or more separate industries with separate NAICS codes or, in some instances (e.g., engineering), smaller sub-components of NAICS codes with separate and distinct size standards. These activities may include, but are not limited to, separate activities in industries such as:
* * * * *
Dated:
Administrator.
[FR Doc. 2014-20838 Filed 9-9-14;
BILLING CODE 8025-01-P
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