The U.S. Small Business Administration (“SBA”) proposes to increase small business size standards for: (1) 209 industries in North American Industry Classification System (NAICS) in the manufacturing sector; and (2) industries with employee based size standards not part of manufacturing, wholesale trade, or retail trade. These proposed rules are parts of a series of proposed rules that will review the size standards of industries.
To be eligible for Federal small business assistance, SBA has established size definitions for small private sector businesses. There are two basic metrics that SBA uses for these standards: average annual receipts and average number of employees. Depending on the industry and program, other factors such as financial assets, electric output, refining capacity, industry-based standards, or net income may also be used. Since the last time the SBA conducted a comprehensive review of the size standards in the late 1970s and early 1980s, SBA has received a barrage of comments stating that the size standards have not kept up with the changing economy, particularly in the Federal contracting marketplace. Accordingly in 2007, SBA began a comprehensive size standards review to determine whether they are consistent with existing data and to make adjustments where appropriate. SBA is reviewing size standards on a sector by sector basis. A NAICS Sector generally includes 25-75 industries, but the NAICS Sector 31-33 (Manufacturing) in this proposed rule includes more than 350 industries. The second proposed rule in this category increases employee based small business size standards for 30 industries and three sub-industries, and decreases them for three industries that are not part of NAICS Sector 31-33, Sector 42 (wholesale trade) or Sector 44-55 (retail trade).