[Federal Register Volume 70, Number 218 (Monday, November 14, 2005)]
[Rules and Regulations]
[Pages 69048-69053]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-22570]
[[Page 69048]]
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SMALL BUSINESS ADMINISTRATION
13 CFR Part 121
RIN 3245-AE81
Small Business Size Standards; Surety Bond Guarantee Program
AGENCY: Small Business Administration.
ACTION: Interim final rule with request for comments.
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SUMMARY: The U.S. Small Business Administration (SBA) is amending the
size eligibility criteria for its Surety Bond Guarantee (SBG) Program
for construction (general or special trades) or service concerns
performing contracts in the Presidentially-declared disaster areas
resulting from the 2005 Hurricanes Katrina, Rita, or Wilma. This rule
amends the SBG size standard for some concerns by requiring them to
meet either the size standard for the primary industry in which it,
together with its affiliates, is engaged, or the current $6 million
standard for the SBG Program, whichever is higher. The amended size
standard applies only to construction and service concerns seeking SBA-
guaranteed surety bonds for contracts or subcontracts, public or
private, that are performed in the Presidentially-declared disaster
areas resulting from the 2005 Hurricanes Katrina, Rita, or Wilma.
Surety companies with whom SBA has executed a Preferred Surety Bond
(PSB) Agreement under 13 CFR part 115 will be responsible for
determining eligibility in compliance with this regulation. SBA surety
bond personnel will be responsible for determining eligibility in
compliance with this regulation for those surety guarantees that
require SBA's prior approval. SBA prepared this rule as an interim
final rule because its immediate implementation will make available
needed SBG Program assistance to otherwise eligible small businesses
and facilitate reconstruction and recovery of the Gulf Coast and
Florida.
DATES: Effective Date: This regulation becomes effective on November
14, 2005.
Comment Period: Comments must be received by SBA on or before
December 14, 2005.
ADDRESSES: You may submit comments identified by RIN 3245-AE81 through
one of the following methods: (1) Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments;
(2) Fax: (202) 205-6390; or (3) Mail/Hand Delivery/Courier: Gary M.
Jackson, Assistant Administrator for Size Standards, 409 Third Street,
SW., Mail Code 6530, Washington, DC 20416.
FOR FURTHER INFORMATION CONTACT: Carl Jordan, Office of Size Standards,
(202) 205-6618 or [email protected].
SUPPLEMENTARY INFORMATION:
SBA's Surety Bond Guarantee Program and Current Size Standards
SBA, through its Surety Bond Guarantee (SBG) Program, can guarantee
bid, performance and payment bonds for contracts up to $2 million for
small contractors who otherwise cannot obtain surety bonds without
SBA's guarantee. SBA's guarantee gives sureties an incentive to provide
bonding for eligible contractors, and thereby strengthens a
contractor's ability to obtain bonding and provides greater access to
contracting opportunities. A contractor applying for an SBA bond
guarantee must qualify as a small business concern, in addition to
meeting the surety company's bonding qualifications. Generally, under
SBA's current Small Business Size Regulations, businesses in
construction and service industries can qualify as small for the SBG
Program if their average annual receipts, including those of their
affiliates, for the last three fiscal years do not exceed $6 million
(13 CFR 121.301(d)(1) and 13 CFR 121.104(c)). For all other types of
business concerns, the concern must meet the size standard for the
primary industry in which it, combined with its affiliates, is engaged
(see 13 CFR 121.201 and Sec. 121.301(d)(2)).
What This Interim Final Rule Accomplishes
This interim final rule amends the size standard applicable to a
construction or service concern seeking an SBA-guaranteed surety bond
by requiring the concern to meet either the size standard for the
industry in which it, combined with its affiliates, is primarily
engaged, or the $6 million standard, whichever is higher. The amended
size standard applies only to businesses with contracts that are
performed in the Presidentially-declared disaster areas resulting from
the 2005 Hurricanes Katrina, Rita, or Wilma.
The small business size standards for industries in North American
Industry Classification System (NAICS) Sector 23, Construction, are the
following: (1) $28.5 million in average annual receipts for building,
heavy, and civil engineering construction; (2) $17 million in average
annual receipts for dredging; and (3) $12 million in average annual
receipts for special trade contractors. Also, the existing small
business size standards for service industries range from $3 million to
$30 million in average annual receipts, depending on the industry. This
rule would expand the pool of businesses eligible for the SBG Program
to include those that are currently excluded because they exceed the $6
million SBG size standard but are considered small under existing size
standards for other purposes, such as the examples in this paragraph.
The amended size standards under this interim final rule are
applicable until SBA determines that it is no longer necessary to
expand the availability of SBG Program assistance for reconstruction
and recovery of the Presidentially-declared disaster areas resulting
from Hurricanes Katrina, Rita, and Wilma. This interim final rule is a
specific response to those natural disasters. SBA is soliciting
comments on how long the amended size standards under this interim
final rule should apply to construction and service concerns performing
contracts or subcontracts in the specified disaster areas. In
particular, SBA is soliciting public comments on factors that would
indicate that the amended size standards are no longer necessary and
the appropriate Agency action after SBA determines that the amended
size standards have served the intended purpose.
SBA continues to believe that its current size standards for other
small business assistance programs appropriately define small business
concerns. As described above, the amended size standard for the SBG
Program is being applied to a limited number of business concerns
performing construction or certain service contracts in limited
geographical areas--the Presidentially-declared disaster areas. This
interim rule does not change the size standards applicable to other
small business programs, including size standards for Federal
contracting. Therefore, this interim final rule will have no effect on
existing Federal contracts, the pool of small businesses competing for
Federal contracts, or the ability of Federal agencies to attain their
small business contracting goals.
SBA has designed this rule so it will not adversely affect any
small businesses. Under this rule, a construction or service concern
must meet either the size standard for its primary industry (when
combined with its affiliates) or the current SBA $6 million standard,
whichever is higher. This guarantees that concerns in service
industries with size standards below $6 million retain their
eligibility for the SBG Program. Most service industries have a $6
million size standard, although some are higher, as stated
[[Page 69049]]
above. There are a small number of other service industries, however,
such as NAICS 541330, Engineering Services, with size standards below
$6 million. Concerns operating in industries with size standards below
$6 million could suffer adverse affects if the rule required them only
to meet the size standard for their primary industries, lower than the
size standard they now must meet for the SBG Program. That would be
contrary to the rule's intent and SBA's mission and goals. Under this
rule, those concerns operating in industries with size standards below
$6 million remain eligible so long as their average annual receipts do
not exceed the current SBG $6 million standard.
Under the Small Business Act, 15 U.S.C. 633(d) (Act), SBA has a
statutory obligation to act in the public interest by establishing
small business size standards to determine eligibility as a small
business concern for Federal assistance. Pursuant to the Act, SBA has
determined that immediate implementation of this rule is in the public
interest and delaying its application would be impracticable. Failure
to adopt this rule could work to the detriment of many small
businesses.
Compliance With This Regulation
Surety companies with whom SBA has executed a Preferred Surety Bond
(PSB) Agreement under 13 CFR part 115 will be responsible for
determining eligibility in compliance with this regulation. They must
determine that the construction or service contracts will be performed
in the Presidentially-declared disaster areas resulting from the 2005
Hurricanes Katrina, Rita, or Wilma and sufficiently document that
bonded contracts meet this eligibility requirement (A list of parishes
and counties declared disaster areas by the President as a result of
the hurricanes is located at: http://www.sba.gov/disaster_recov/katrinafactsheets.html.) They must also determine that the concern
seeking this SBA-guaranteed bonding assistance meets the applicable
size standard for its primary industry (when combined with its
affiliates), or has average annual receipts that do not exceed $6
million, whichever size standard is higher. SBA surety bond personnel
will be responsible for determining eligibility in compliance with this
regulation for those surety guarantees that require SBA's prior
approval and document their findings accordingly. Small businesses
seeking such SBA assistance do not need to be located in the disaster
areas, provided they perform the contracts in the Presidentially-
declared disaster areas resulting from the 2005 Hurricanes Katrina,
Rita, or Wilma. This rule enables these small businesses all over the
country to assist other businesses and individuals that need their
services.
Reasons for Limiting the Application of This Amended SBG Size Standard
to Only Contracts and Subcontracts Performed in Certain Areas
In the wake of Hurricanes Katrina, Rita, and Wilma, public and
private entities will spend significant amounts on recovery efforts for
many years. Much of this work will be for construction and services.
The Federal Government is committed to facilitating small business
participation in the reconstruction and recovery efforts in the Gulf
Coast region and Florida.
SBA recognizes that some construction or service contracts and
subcontracts may be performed outside the Presidentially-declared
disaster areas that are connected (by varying degrees) to
reconstruction and recovery activities in the Gulf Coast and Florida.
However, SBA limited the application of this amended SBG size standard
to only contracts and subcontracts performed in Presidentially-declared
disaster areas because the limit is an objective standard that sureties
and SBA can apply in a consistent and fair manner. Furthermore, those
contracts and subcontracts will have a direct impact on communities in
the Gulf Coast and Florida because the reconstruction activities will
restore the infrastructure and the service activities will serve
residents of affected areas. SBA believes that amending the SBG
Program's $6 million size standard for construction and service
concerns seeking SBA-guarantees will expand procurement opportunities
for small businesses in the construction and service industries,
including local small businesses within the Presidentially-declared
disaster areas, while facilitating the reconstruction of the affected
areas and serving victims of Hurricanes Katrina, Rita, and Wilma.
Reasons for Using the Size Standard for the Primary Industry of the
Construction or Service Concern as an Alternate Size Standard for the
SBG Program
This interim final rule makes the size eligibility criteria for the
SBG Program more consistent with other SBA financial assistance
programs. Both SBA's 7(a) Business Loan Program and its Disaster
Assistance EIDL Program determine size eligibility based on the primary
industry in which the applicant, together with its affiliates, is
engaged. Many small businesses affected by Hurricanes Katrina, Rita, or
Wilma are seeking and will be seeking assistance through SBA's programs
and obtaining Federal and non-Federal contracts. Applying similar size
eligibility criteria to the SBG Program will complement the assistance
these other SBA programs and Federal contracting provide.
The SBA's current Small Business Size Regulations do permit, under
certain circumstances, a small construction or service contractor with
annual receipts greater than $6 million to qualify as eligible for its
SBG Program. This occurs only when a construction or service concern
meets the size standard for the NAICS code that best describes the
principal purpose of the procurement (see 13 CFR 121.402(a)) and when
it is the prime contractor for the Federal procurement. Section 121.305
provides ``A concern qualified as small for a particular procurement,
including an 8(a) subcontract, is small for financial assistance
directly and primarily relating to the performance of the particular
procurement.'' However, this provision only applies when the concern is
a prime contractor with the Federal Government. A surety bond running
to another obligee, other than the Federal Government, such as a
private owner, another contractor, a not-for-profit entity, or non-
Federal political subdivision, is not eligible for SBA's guarantee
under existing regulations unless the contractor meets the SBG $6
million size standard.
However, most SBA-guaranteed surety bonds are for contractors who
are not prime contractors with the Federal Government. Applying the
industry size standards to non-Federal contracts enables small
construction and service concerns above $6 million in size to be
equally as competitive for Federal contracts as non-Federal contracts.
To limit access to the SGB Program to only concerns with average annual
receipts that do not exceed $6 million, or to consider a size standard
different from the industry size standards, would likely limit small
business opportunities at a time when potential assistance is most
needed.
Justification for Publication as an Interim Final Rule
In general, SBA publishes a proposed rule for public comment before
issuing a final rule, in accordance with the Administrative Procedure
Act (APA) and SBA regulations. (5 U.S.C. 553 and 13 CFR 101.108). The
APA provides an exception to the standard rulemaking process, however,
when an agency finds good cause to adopt a rule without prior public
participation. (5 U.S.C.
[[Page 69050]]
553(b)(3)(B)). The good cause requirement is satisfied when prior
public participation is impracticable, unnecessary, or contrary to the
public interest. Under those conditions, an agency may publish an
interim final rule without first soliciting public comment.
In the good cause exception to standard rulemaking procedures,
Congress recognized that emergencies (such as the need for disaster
assistance) might arise when an agency must issue a rule without prior
public participation. On August 29, 2005, the President declared major
disaster areas in Louisiana, Mississippi, and Alabama in the aftermath
of Hurricane Katrina. The President also declared major disaster areas
in Louisiana and Texas after Hurricane Rita destroyed more of the Gulf
Coast region and in Florida after Hurricane Wilma. These natural
disasters have affected U.S. businesses in the declared disaster areas
and across the Nation. Implementing this rule immediately will support
the economic recovery of the Gulf Coast region and Florida and is in
the best interest of the public. Construction and service concerns
affected by the disaster will be more able to assist in the rebuilding
and clean-up efforts, and in delivering much needed services to
disaster victims. This rule will also assist small construction and
service concerns not affected by the disaster to provide disaster
assistance in their industries.
The Federal Government and other public and private entities are,
and will be, contracting for clean-up activities, substantial
reconstruction and other services in the disaster areas. However, some
small construction and service concerns that had been able to obtain
standard surety bonding before the disasters may now need SBA's
guarantee because of their deteriorating financial conditions. This
rule will permit more businesses to qualify for SBA-guaranteed surety
bonds and perform contracts to help rebuild and revitalize the Gulf
Coast region and Florida. Strong small business participation, in turn,
will promote economic recovery in the area. In the public interest,
this interim final rule would increase the number of small business
participants in these efforts.
Accordingly, SBA finds good cause to publish this rule as an
interim final rule because of the urgent need to speed delivery of
disaster assistance to the affected area. Furthermore, advance
solicitation of comments for this rulemaking would be impracticable and
contrary to the public interest because it would delay delivery of
critical assistance to these businesses by at least four to six months.
Such delay could have serious adverse affects on small businesses and
the public in the disaster area. Immediate access to SBA-guaranteed
surety bonds can help protect some small businesses that might
otherwise have to cease operations before a rule could be promulgated
under standard notice and comment rulemaking procedures.
Although SBA is publishing this rule as an interim final rule, the
Agency requests interested parties to submit their comments to the
amended size standard. In particular, SBA welcomes comments on how long
the amended size standards under this interim final rule should apply
to construction and service concerns performing contracts or
subcontracts in the specified disaster areas, factors SBA should
consider before determining that the size standards are no longer
necessary, and the appropriate Agency action after SBA makes that
determination. SBA must receive the comments on or before December 14,
2005. SBA may then consider these comments in making any necessary
revisions to these regulations.
Justification for Immediate Effective Date of Interim Final Rule
The APA requires that ``publication or service of a substantive
rule shall be made not less than 30 days before its effective date,
except * * * as otherwise provided by the agency for good cause found
and published with the rule.'' 5 U.S.C. 553(d)(3). SBA finds that good
cause exists to make this final rule become effective on the same day
it is published in the Federal Register.
The purpose of the APA provision delaying the effective date of a
rule for 30 days after publication is to provide interested and
affected members of the public sufficient time to adjust their behavior
before the rule takes effect. In this case, however, the 30-day delay
is unnecessary because this interim final rule would not require
businesses, sureties, or SBA to make significant changes to their
current procedures when applying for, issuing, or guaranteeing surety
bonds. Sureties and SBA would begin applying the new size eligibility
criteria to businesses upon publication of this interim final rule.
Furthermore, SBA does not expect to receive any comments from those
stakeholders in the SBG Program or others opposing the immediate
effective date of this interim final rule. SBA included a proposal
similar to this interim final rule in a proposed rule published on
March 19, 2004 (69 FR 13129), and the Agency did not receive any
comments opposing it. Moreover, SBA believes, based on its discussions
with interested members of the public and the need to quickly assist
hurricane victims, that there is a strong interest in immediate
implementation of this rule. SBA is aware of many entities that will be
assisted by the immediate adoption of this rule, many of those are
small businesses directly affected by the natural disasters.
Compliance With Executive Orders 12866, 12988, and 13132, the
Regulatory Flexibility Act (5 U.S.C. 601-612) and the Paperwork
Reduction Act (44 U.S.C. Ch. 35)
The Office of Management and Budget (OMB) has determined that this
rule is a ``significant regulatory action'' under section 3(f) under
Executive Order 12866. A general discussion of the need for this
regulatory action and its potential costs and benefits follows.
1. Is There a Need for the Regulatory Action?
SBA's statutory mission is to aid and assist small businesses
through a variety of financial, procurement, business development, and
advocacy programs. To effectively assist the intended beneficiaries of
these programs, SBA must establish distinct definitions of which
businesses are deemed small businesses. The Small Business Act (15
U.S.C. 632(a)) (Act) delegates to the SBA Administrator the
responsibility for establishing small business definitions. The Act
also requires that small business definitions vary to reflect industry
differences, as necessary.
As discussed in the above supplemental information section, this
interim final rule is needed to expand eligibility for SBA's SBG
Program to construction and service contractors participating in the
reconstruction and recovery efforts of the Gulf Coast and Florida. The
amended size standard for the SBG Program only applies to contracts
that are performed in the Presidentially-declared disaster areas
resulting from the 2005 Hurricanes Katrina, Rita, or Wilma. This action
will assist construction and service concerns located in the disaster
areas and across the Nation by providing access to the SBG Program and
expanding procurement opportunities for them. Disaster victims will
also benefit as small businesses help to rebuild their communities.
2. What Are the Potential Benefits and Costs of This Regulatory Action?
At this time, SBA cannot estimate the number or value of contracts,
Federal or non-Federal, that small construction and service concerns
will undertake to rebuild the Gulf Coast and Florida
[[Page 69051]]
following Hurricanes Katrina, Rita, or Wilma. SBA cannot estimate the
number or value of contracts that will require surety bonds or the
number or value of surety bonds that SBA will guarantee. Nor can it
estimate the number of small businesses affected and not affected by
the natural disasters that will participate in the SBG Program after
the publication of this rule. SBA does believe, however, that expanding
eligibility for its SBG Program will provide the disaster victims with
significant and timely benefits when and where the greatest needs
exist. For example, disaster-affected small business concerns can
receive SBG Program assistance to restart their businesses. Other small
business concerns may qualify to contract for more and larger surety
bonds with SBA's guarantee.
SBA expects that this rule will lead to an increase in the number
of SBA-guaranteed bonds. Although SBA does not anticipate loss rates
changing significantly after this interim final rule becomes effective,
the Government may incur additional costs to honor its guarantee on a
greater volume of (but stable percentage of) defaulted bonds. SBA must
honor its guarantees to the sureties on defaulted bonds for the
percentage of loss that it guaranteed. Guaranteed amounts vary as
follows: (1) Under the PSB Program, 70 percent (this does not change);
(2) under the prior approval program, contracts valued at $100,000 or
less, or on behalf of a concern owned by a socially and economically
disadvantaged individual, 90 percent; and (3) for contracts in excess
of $100,000 there is a gradually decreasing percentage, but the
percentage does not fall below 80 percent (13 CFR 115.31). For fiscal
years 2003, 2004 and 2005, SBA's loss rates were 1.8 percent, 1.3
percent and 1.6 percent, respectively. SBA expects these rates to
remain stable even though the volume of SBA-guaranteed surety bonds is
expected to increase.
Among businesses seeking SBA's assistance through the SBG Program,
there could be additional costs for professional time required to
complete applications for the surety and the SBA guarantee. Businesses
also incur costs through payment of fees to participate in the SBG
Program. Contractors pay a fee of $6 per $1,000 of the contract value,
which the surety companies remit to SBA. (13 CFR 115.32). Although
there have been no protests of a SBG Program participant's small
business status in the last five years, at least, businesses could also
incur legal costs associated with defending themselves against size
protests. Businesses may also incur legal costs associated with
compliance.
Both surety companies and SBA could incur additional administrative
costs as a result of processing the increased volume of surety bond
applications and applications for the SBA-guarantee. There may be
additional administrative costs for PSB surety bond companies because
they must document the contractors' eligibility for the SBA-guaranteed
surety bond under the amended size standard. SBA anticipates, however,
that these additional administrative costs will be minimal because
surety companies and SBA already perform these administrative functions
in the ordinary course of business.
SBA anticipates little or no adverse effects on currently defined
small businesses from the increase in the number of newly eligible
small businesses. Potentially, a newly defined small business could
obtain a contract that a currently defined small business may have
received. SBA expects those cases to be few in number because the
decision to award a contract is based on many considerations. This rule
enhances the environment for small construction and service concerns to
compete for opportunities and strengthens their competitiveness related
to contracts performed in the Presidentially-declared disaster areas
resulting from the 2005 Hurricanes Katrina, Rita, or Wilma.
For purposes of Executive Order 12988, SBA has drafted this rule,
to the extent practicable, in accordance with the standards set forth
in section 3 of that Order.
This regulation 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 responsibility among the
various levels of government. Therefore, under Executive Order 13132,
SBA determines that this rule does not have sufficient federalism
implications to warrant the preparation of a federalism assessment.
SBA has determined that this rule does not impose any new
information collection requirements from SBA that require approval by
OMB under the Paperwork Reduction Act of 1980, 44 U.S.C. Ch. 35.
Under the Regulatory Flexibility Act (RFA), this rule may have a
significant impact on a substantial number of small entities.
Immediately below, SBA sets forth an initial regulatory flexibility
analysis (IRFA) addressing the reasons for promulgating the rule; the
objectives of this rule; SBA's descriptions and estimate of the number
of small entities to which the rule will apply; a description of
potential benefits of the rule; the projected reporting record keeping
and other compliance requirements of the rule; the relevant Federal
rules which may duplicate, overlap or conflict with the rule; and
alternatives considered by SBA.
(1) What Is the Reason for This Action?
As discussed in the above supplemental information section, this
rule provides immediate eligibility to construction and service
contractors for SBA's SBG Program under the same small business size
standards that apply to all other SBG applicants. However, SBA will
only guarantee surety bonds for contracts to eligible small
construction or service concerns that will be performed in the
Presidentially-declared disaster areas resulting from the 2005
Hurricanes Katrina, Rita, or Wilma.
Surety companies with whom SBA has executed a Preferred Surety Bond
(PSB) Agreement under 13 CFR part 115 will be responsible for
determining eligibility in compliance with this regulation. SBA surety
bond personnel will be responsible for determining eligibility in
compliance with this regulation for those surety guarantees that
require SBA's prior approval.
(2) What Are the Objectives and Legal Basis for the Rule?
Section 3(a) of the Small Business Act (15 U.S.C. 632(a)) gives SBA
authority to establish and change size standards. SBA is using that
discretionary authority to provide SBG Program assistance to those who
need it and to those who can help with recovery and reconstruction.
SBA intends to provide immediate SBG Program assistance to
construction and service contractors in the areas affected by
Hurricanes Katrina, Rita, or Wilma. SBA intends also to provide SBG
Program assistance to construction and service contractors not directly
affected by the hurricanes, if their contracts or subcontracts are
performed in the Presidentially-declared disaster areas resulting from
the 2005 Hurricanes Katrina, Rita, or Wilma.
(3) What Is SBA's Description and Estimate of the Number of Small
Entities To Which the Rule Will Apply?
This rule applies to all construction (general and special trades)
and service concerns that meet the amended size standard and perform
contracts that are performed in the Presidentially-declared disaster
areas resulting from the 2005 Hurricanes Katrina, Rita, or Wilma. SBA
is issuing this interim final rule without
[[Page 69052]]
estimating the number of small entities affected by this interim final
rule in the interest of assisting disaster victims and providing
immediate opportunities for small businesses to participate in the
recovery efforts. The scope of this amended size standard is limited to
contracts performed in the Presidentially-declared disaster areas
resulting from the 2005 Hurricanes Katrina, Rita, or Wilma. It is
likely that most construction and service concerns that will benefit
from this rule will also be located in the Gulf Coast states and
Florida. SBA welcomes comments describing the types and number of small
entities that this rule will affect.
(4) Description of Potential Benefits of the Rule
The most significant benefits of this rule will flow to small
businesses and victims of Hurricanes Katrina, Rita, or Wilma in the
Gulf Coast region of the United States and Florida. Many small
construction and service contractors were not eligible for SBG
assistance before this rule because their annual receipts exceeded $6
million. Under this interim final rule, they are eligible if they
(together with their affiliates) meet the small business size standards
for their primary industries or the current SBG $6 million standard,
whichever is higher. Small construction and service contractors not
directly affected by the hurricanes, but that can provide assistance,
are similarly eligible now if they (together with their affiliates)
meet the small business size standards for their primary industries or
the current SBG $6 million standard, whichever is higher. In the end,
hurricane victims will benefit the most.
SBA cannot estimate of the number or value of contracts, whether
Federal or non-Federal, that they will receive. Nor can we estimate the
number of small businesses affected and not affected by the disaster
that will benefit. SBA does believe, however, that the increase in
eligibility for its SBG Program will provide the disaster victims with
significant and timely benefits. Disaster-affected small business
concerns can receive SBG Program assistance to restart their
businesses. Other small business concerns may qualify for more and
larger contracts and surety bonds with SBA's guarantee.
This rule does not affect other than small businesses. However,
entities that are not small businesses, such as not-for-profit
entities, cities, towns, and other political subdivisions, can be
beneficiaries of the reconstruction and services that small businesses
will provide.
This rule will not provide assistance under SBA's 7(a) Guaranteed
Loan Program, or any other program. This rule does not amend or
otherwise modify the small business size standard for any other SBA
programs, including its 7(a) Guaranteed Loan and Disaster Assistance
EIDL Programs. However, it will enable businesses to obtain SBA-
guaranteed surety bonding that may work hand-in-hand with SBA's
Business Loan and EIDL Programs, for those that apply for and receive
financial assistance under one or both of them.
(5) Will This Rule Impose Any Additional Reporting or Recordkeeping
Requirements on Small Businesses?
This rule does not impose any new information collection
requirements under the Paperwork Reduction Act of 1980, 44 U.S.C. Ch.
35. A new size standard does not impose any additional reporting,
recordkeeping or compliance requirements on small entities. Increasing
size standards expands access to SBA programs that assist small
businesses, but does not impose a regulatory burden because small
business size standards neither regulate nor control business behavior.
(6) What Are the Relevant Federal Rules Which May Duplicate, Overlap or
Conflict With This Rule?
This rule affects only SBA's SBG Program. This rule does not
overlap with other Federal rules that use SBA's size standards to
define a small business. Under section 632(a)(2)(C) of the Small
Business Act, unless specifically authorized by statute, Federal
agencies must use SBA's size standards to define a small business. In
1995, SBA published in the Federal Register a list of statutory and
regulatory size standards that identified the application of SBA's size
standards as well as other size standards used by Federal agencies (60
FR 57988-57991, November 24, 1995). SBA is not aware of any Federal
rule that would duplicate or conflict with this rule.
This regulation will not impact other Federal programs that use its
size standards. When a Federal agency believes that an SBA-established
size standard is not appropriate for its programs, the Small Business
Act and SBA's regulations allows that agency to develop different size
standards, subject to the approval of the SBA Administrator. (13 CFR
121.902). For a regulatory flexibility analysis, agencies must consult
with SBA's Office of Advocacy when developing different size standards
for their programs.
(7) What Alternatives Did SBA Consider?
One alternative to this rule would be to leave the SBG Program size
standard unchanged. However, given the immediacy and anticipated extent
of the need at hand, SBA believes this would not be in the best
interests of disaster victims.
Another alternative is to issue a proposed rule. However, as stated
above, that process could conceivably take at least four to six months
before any final action would occur. This too, could be harmful to
small businesses who may be forced to cease operations before the final
rule could be published. Also, delayed reconstruction efforts would not
be in the best interests of disaster victims. This interim final rule
will provide immediate assistance where needed and at the same time
provide opportunity for interested parties to comment on the rule.
List of Subjects in 13 CFR Part 121
Government procurement--business, Loan programs--business, Disaster
assistance loans, Reporting and recordkeeping requirements, Small
business.
0
For reasons set forth in the preamble, amend part 121 of title 13 Code
of Federal Regulations as follows:
PART 121--SMALL BUSINESS SIZE REGULATIONS
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1. The authority citation for part 121 is revised to read as follows:
Authority: 15 U.S.C. 632, 634(b)(6), 636(b), 637(a), 644, and
662(5); and Pub. L. 105-135, sec. 401 et seq., 111 Stat. 2592.
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2. Amend Sec. 121.301 by revising paragraph (d)(1) and adding
paragraph (d)(3) to read as follows:
Sec. 121.301 What size standards are applicable to financial
assistance programs?
* * * * *
(d) * * *
(1) Any construction (general or special trade) concern or concern
performing a contract for services is small if, together with its
affiliates, its average annual receipts do not exceed $6.0 million,
except as provided in Sec. 121.301(d)(3).
(2) * * *
(3) For any contract or subcontract, public or private, to be
performed in the Presidentially-declared disaster areas resulting from
the 2005 Hurricanes Katrina, Rita, or Wilma, the construction (general
or special trade) concern or concern performing a contract for services
is small if it meets the size standard for the primary industry in
[[Page 69053]]
which it, together with its affiliates, is engaged, or if it meets the
size standard set forth in paragraph (d)(1), whichever is higher.
* * * * *
Dated: November 8, 2005.
Hector V. Barreto,
Administrator.
[FR Doc. 05-22570 Filed 11-10-05; 8:45 am]
BILLING CODE 8025-01-P