The U.S. Small Business Administration (SBA) published two final rules to revise small business size standards for Manufacturing industries in North American Industry Classification System (NAICS) Sector 31-33 and industries with employee-based size standards that are not a part of NAICS Sector 31-33, Sector 42 (Wholesale Trade), and Sector 44-45 (Retail Trade). The final rules were published in the Federal Register on January 25th and will be effective February 26, 2016.
As part of its comprehensive size standards review required by the Small Business Jobs Act of 2010, SBA evaluated employee-based size standards for all 364 industries in NAICS Sector 31-33 and 57 industries and five exceptions that are not in NAICS Sectors 31-33, 42, or 44‑45 to determine whether they should be retained or revised.
In the first final rule, SBA increased size standards for 209 industries in Sector 31-33. SBA also increased the refining capacity component of the Petroleum Refiners (NAICS 324110) size standard to 200,000 barrels per calendar day total capacity for businesses that are primarily engaged in petroleum refining. The rule also eliminates the requirement that 90 percent of a refiner’s output being delivered should be refined by the bidder.
In the second final rule, SBA increased the employee-based size standards for 30 industries and three exceptions and decreased them for three industries that are not in Sectors 31-33, 42, or 44‑45.
Additionally, in the second rule, SBA amends Footnote 18 to SBA’s table of size standards by adding the requirement that the supply (i.e., computer hardware and software) component of small business set-aside Information Technology Value Added Resellers (ITVAR) contracts must comply with the nonmanufacturing performance requirements or nonmanufacturer rule. In the proposed rule, the SBA sought comments on eliminating the ITVAR exception under NAICS 541519 (Other Computer Related Services) together with its 150-employee size standard. In the final rule, SBA maintains ITVAR exception” under NAICS 541519 with the 150-employee size standard.
The second rule also eliminates the Offshore Marine Air Transportation Services exception under NAICS 481211 and 481212 and Offshore Marine Services exception under NAICS Subsector 483 and their $30.5 million revenues based size standard. Accordingly, the rule also removes Footnotes 15 and 18 from the SBA’s table of size standards.
The new size standards will enable nearly 1,650 more businesses in those industries to obtain or retain small business status; will give federal agencies a larger pool of small businesses from which to choose for their procurement programs; and will make more small businesses eligible for SBA’s loan programs.
When reviewing size standards, SBA takes into account the structural characteristics of individual industries, including average firm size, startup cost and entry barriers, the degree of competition, and small business share of federal government contracting dollars. This ensures that small business size definitions reflect current economic conditions and federal marketplace in those industries. Public comments on the proposed rules are also important to this process. The Small Business Jobs Act of 2010 requires SBA to review all size standards at least every five years.
A White Paper entitled, “Size Standards Methodology,” explaining how SBA establishes, reviews, or modifies its receipts based and employee based small business size standards, is available at http://www.sba.gov/size.
For more information on SBA’s revisions to its small business size standards for various industry sectors, click on “What’s New with Size Standards” on SBA’s Web site at http://www.sb