SBA Proposes Revisions to Employee-Based Size Standards for Manufacturing and Other Industry Sectors

The U.S. Small Business Administration published two proposed rules to revise small business size standards in North American Industry Classification System (NAICS) Sector 31-33 (Manufacturing) 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 proposed rules were published in the Federal Register today. 

As part of its comprehensive size standards review required by the Small Business Jobs Act of 2010, the 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 rule, SBA proposes to increase size standards for 209 industries in Sector 31-33.  The SBA also proposes to increase 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 proposed rule also eliminates the requirement that 90 percent of a refiner’s output being delivered should be refined by the bidder. 

In the second rule, SBA proposes to increase the employee-based size standards for 30 industries and three exceptions and decrease them for three industries that are not in Sectors 31-33, 42, or 44€‘45.

Additionally, SBA proposes to remove the Information Technology Value Added Resellers exception under NAICS 541519 (Other Computer Related Services) together with its 150-employee-based size standard.  Similarly, SBA also proposes to eliminate 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 receipts based size standard.  Accordingly, the second proposed rule also removes Footnotes 15 and 18 from the table of size standards.

If the changes in the two rules are adopted as proposed, nearly 1,650 more firms will become small and eligible for federal procurement and SBA’s loan programs. 

Comments can be submitted on the proposed rules on or before November 10, 2014 at www.regulations.gov, identified by the following RIN numbers: (RIN 3245-AG50 for Sector 31€‘33) and (RIN 3245-AG51 for employee-based size standards for industries that are not part of

Sector 31-33, Sector 42 or Sector 44-45).  You may also mail comments to Khem R. Sharma, Chief, Office of Size Standards, 409 3rd St., SW, Mail Code 6530, Washington, DC  20416.

For size standards review, 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. 

An SBA-issued White Paper entitled, “Size Standards Methodology,” which explains how SBA establishes, reviews and modifies its receipts-based and employee-based small business size standards, can be viewed at http://www.sba.gov/size.

For more information about 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.sba.gov/size.