Government Contracts Monitor
SBA Increases Size Standards for NAICS Sector 54 and NAICS Code 811212, Effective March 12, 2012
March 8, 2012
The U.S. Small Business Administration (“SBA”) recently issued a new Final Rule, effective March 12, 2012, increasing the small business size standards for 34 industries and 3 sub-industries in NAICS Sector 54, “Professional, Technical and Scientific Services,” as well as for NAICS Code 811212, “Computer and Office Repair and Maintenance.” Small Business Size Standards: Professional, Technical, and Scientific Services, 77 Fed. Reg. 7490 (Feb. 10, 2012) (to be codified at 13 C.F.R. Part 121). These increases will enable many formerly small companies to once again qualify and compete as small businesses for new procurement opportunities in these industries. These increases also will expand the pool of qualified small businesses with which large companies can contract under their small business subcontracting plans. It therefore will behoove all businesses, both large and small, competing in these industries, to familiarize themselves with these new size standards.
SBA’s size standards are set forth in 13 C.F.R Part 121. Starting in 2007, SBA began a comprehensive review of its size standards. This effort has taken on increased impetus in view of the mandate in the Small Business Jobs Act of 2010, Pub. L. No. 111-240, signed September 27, 2010, directing SBA to conduct a detailed review of all size standards and to make appropriate adjustments to reflect market conditions. SBA is now required to conduct a detailed review of at least one-third of all size standards during every 18-month period, and to do a complete review of all size standards no less frequently than every five years.
As part of this ongoing process, SBA published a proposed rule for public comment last winter, proposing to increase the size standards for many industries in NAICS Sector 54, as well as NAICS Code 811212, which had been reserved and held over from an earlier review of Sector 81, because this industry shares a common size standard with computer related services in Sector 54. Small Business Size Standards: Professional, Scientific and Technical Services, 76 Fed. Reg. 14,323 (proposed March 16, 2011) (to be codified at 13 C.F.R. Part 121). SBA received 1,426 comments on the proposed rule from about 1,320 unique members of the public, representing a wide range of interests, including a dozen trade groups and professional associations. 77 Fed. Reg. at 7491. Some 30 percent of these comments supported SBA’s proposed changes, 53 percent opposed the proposed revisions, and 12 percent supported SBA’s efforts to increase the size standards, but recommended smaller increases. Id.
Importantly, SBA has decided, as a matter of policy, that it will not reduce size standards incident to the ongoing review process, even where data suggests the appropriateness of a reduction, as such would run counter to the Administration’s and SBA’s efforts to help small businesses and create jobs. Id. Therefore, no size standards are being reduced.
SBA adopted its proposed increases in those industries where there were few comments or no substantive objections. However, where significant, substantive, comments were received, particularly with respect to NAICS Group 5413, Architectural, Engineering and Related Services, and Group 5415, Information Technology Services, SBA re-evaluated industry and Federal procurement data, and adjusted its proposed increases in light thereof and other factors, in some cases adopting higher increases and in other cases lowering increases. All industries not increased remain at their present levels.
One interesting issue relates to the suggestion by a commenter that SBA evaluate inflation as an additional factor when reviewing size standards. In rejecting this suggestion, SBA commented that the current comprehensive size standards review is based primarily on SBA’s evaluation of industry and Federal procurement factors. SBA stated that “the latest inflation adjustment for all receipts based size standards . . . was completed in July 2008,” and that “SBA plans to adjust all monetary size standards together for inflation after it completes its review of all receipts based size standards.” 77 Fed. Reg. at 7501. SBA stated that making inflation adjustments on a Sector-by-Sector basis would result in “inconsistent size standards across industries.” Id.
For the reader’s convenience, we are attaching here SBA’s Table, entitled “Summary of Size Standards Changes,” which identifies the various impacted NAICS Codes and industry titles, and sets forth the current, proposed and final adopted revised size standard amounts. 77 Fed. Reg. at 7509-10.
Hopewell Darneille is the attorney responsible for the content of this post.