[Federal Register Volume 75, Number 193 (Wednesday, October 6, 2010)]
[Rules and Regulations]
[Pages 61591-61597]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-24860]
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SMALL BUSINESS ADMINISTRATION
13 CFR Part 121
RIN 3245-AF70
Small Business Size Standards; Other Services.
AGENCY: U.S. Small Business Administration.
ACTION: Final rule.
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SUMMARY: The United States Small Business Administration (SBA) is
increasing the small business size standards for 18 industries in North
American Industry Classification System (NAICS) Sector 81, Other
Services, and retaining the current standards for the remaining 30
industries in the Sector. As part of its ongoing initiative to review
all size standards, SBA has evaluated every industry in NAICS Sector 81
to determine whether the existing size standards should be retained or
revised.
DATES: This rule is effective November 5, 2010.
FOR FURTHER INFORMATION CONTACT: Carl Jordan, Program Analyst, Office
of Size Standards, (202) 205-6618 or [email protected].
SUPPLEMENTARY INFORMATION:
Introduction
To determine eligibility for Federal small business assistance
programs, SBA establishes small business size definitions (referred to
as size standards) for private sector industries in the United States.
SBA's existing size standards use two primary measures of business
size--receipts and number of employees. Financial assets, electric
output and refining capacity are used as size measures for a few
specialized industries. In addition, SBA's Small Business Investment
Company (SBIC) and the Certified Development Company (CDC) Programs
determine small business eligibility using either the industry based
size standards or net worth and net income size standards. Currently,
SBA's size standards consist of 45 different size levels, covering
1,141 NAICS industries and 17 sub-industry activities. Of these size
levels, 32 are based on average annual receipts, eight are based on
number of employees, and five are based on other measures. In addition,
SBA has established 11 other size standards for its financial and
procurement programs.
Over the years, SBA has received comments that its size standards
have not kept up with changes in the economy and, in particular, that
they do not reflect changes in the Federal contracting marketplace. The
last overall review of size standards occurred during the late 1970s
and early 1980s. Since then, most reviews of size standards have been
limited to in-depth analyses of specific industries in response to
requests from the public and Federal agencies. SBA also makes periodic
inflation adjustments to its monetary based size standards. The latest
inflation adjustment to size standards was published in the Federal
Register on July 18, 2008 (73 FR 41237).
SBA recognizes that changes in industry structure and the Federal
marketplace over time have rendered existing size standards for some
industries no longer supportable by current data. Accordingly, SBA has
begun a comprehensive review of its size standards to determine whether
existing size standards have supportable bases relative to the current
data, and, where necessary, to make revisions to current size
standards. Rather than review all size standards at one time, SBA has
taken a more manageable approach to reviewing a group of related
industries within an NAICS Sector in phases. SBA expects to complete
its review of all NAICS Sectors in two years.
As part of its ongoing effort to review all small business size
standards, SBA evaluated every industry in NAICS Sector 81, Other
Services, to determine whether the existing size standards should be
retained or revised, and published a proposed rule for public comment
in the October 21, 2009 issue of Federal Register (74 FR 53941) to
increase the standards for 18 industries in that Sector. The proposed
rule was one of a series of proposals that will examine industries
grouped by an NAICS Sector. SBA also published concurrently in the same
October 21, 2009 issue of the Federal Register proposed rules to
increase 47 small business size standards in NAICS Sector 44-45, Retail
Trade, (74 FR 53924) and five standards in NAICS Sector 72,
Accommodation and Food Services (74 FR 53913). Similarly, SBA is
publishing final rules on NAICS Sector 44-45 and NAICS Sector 72
elsewhere in this issue of the Federal Register.
In addition, SBA established its ``Size Standards Methodology'' for
reviewing small business size standards and modifying them, where
necessary. SBA published in the October 21, 2009 issue of the Federal
Register (74 FR 53940) a notice of its availability, for public
comments, on SBA's Web site at http://www.sba.gov/contractingopportunities/officials/size/index.html. In addition, SBA
has placed a copy of its ``Size Standards Methodology'' in the
electronic docket of this rule on http://www.regulations.gov and is
available there as well.
In evaluating an industry's size standard, SBA examines the
industry's characteristics (such as average firm size, startup costs,
industry competition and distribution of firms by size), Federal
government contracting trends, impact on SBA financial assistance
programs, and dominance in field of operations. SBA analyzed the
characteristics of each industry in NAICS Sector 81 mostly using a
special tabulation obtained from the U.S. Bureau of the Census from its
2002 Economic Census (the latest available). SBA evaluated Federal
contracting trends in that Sector using the data from the Federal
Procurement Data System--Next Generation (FPDS-NG) for fiscal years
2006-2008. To evaluate the impact of changes to size standards on its
loan programs, SBA analyzed internal data on its guaranteed loan
programs for fiscal years 2006-2008.
SBA's ``Size Standards Methodology'' provides a detailed
description of analyses of various industry and program factors and
data sources and derivation of size standards using the results. In the
proposed rule itself, SBA detailed how it applied its ``Size
[[Page 61592]]
Standards Methodology'' to review, and to modify where necessary, the
existing standards for the Sector and Industries under analysis.
SBA sought comments from the public on a number of issues about its
``Size Standards Methodology,'' such as whether there are alternative
methodologies that SBA should consider; whether there are alternative
or additional factors or data sources that SBA should evaluate; whether
SBA's approach to establishing small business size standards makes
sense in the current economic environment; whether SBA's definitions of
anchor size standards are appropriate in the current economy; whether
there are gaps in SBA's methodology because of the lack of
comprehensive data; and whether there are other facts or issues that
SBA should consider in its methodology.
SBA did not receive any comments on its ``Size Standards
Methodology.'' SBA continues to welcome comments from interested
parties.
In the proposed rule, based on its analyses of the latest industry
and relevant data SBA proposed to increase 18 of the 48 size standards
in NAICS Sector 81. SBA's analyses supported retaining the existing
size standards for nine industries. As noted in the proposed rule,
SBA's analyses would support reducing size standards for the remaining
20 industries in the Sector. However, as the proposed rule pointed out,
SBA believes that lowering size standards and thereby reducing the
number of firms eligible to participate in Federal small business
assistance programs would run counter to what the Agency is doing to
help small businesses. Therefore, SBA proposed to retain the existing
size standards for those 20 industries. Because of similarities between
NAICS 811212, Computer and Office Machine Repair and Maintenance, and
several computer services related industries in NAICS Sector 54,
Professional, Technical and Scientific Services, SBA decided to review
the size standard for that Industry when it reviews size standards for
computer related services in NAICS Sector 54. SBA proposed to retain
the current $25 million standard for that industry until it reviews
that Sector.
Summary of Comments
The proposed rule sought comments from the public on SBA's proposal
to increase size standards for the 18 industries in NAICS Sector 81,
Other Services, and retain the size standards for remaining 30
industries in that Sector. SBA also requested comments on whether it
should simplify size standards by reducing them to eight fixed levels.
SBA received three comments, one of which supported the proposed
standards and two did not. Each of these comments is discussed below.
One commenter supported using Federal contracting as one of the
factors SBA considers when determining size standard because it is
``consistent with the statutory guidance that encourages an industry-
by-industry analysis.'' The commenter was referring to the Small
Business Act (Act) which states in Sec. 3(a)(3) that ``the [SBA]
Administrator shall ensure that the size standard varies from industry
to industry to the extent necessary to reflect the differing
characteristics of the various industries and consider other factors
deemed to be relevant by the Administrator.'' (15 U.S.C. 632(a)(3))
The commenter suggested that SBA establish ``a separate size
standard for Federal procurement within each industry category or
specific NAICS code.'' SBA does not concur with this comment for
several reasons. First, SBA believes that having separate size
standards for each industry for Federal procurement and other programs
would create confusion and unnecessary complexity, and it would run
counter to SBA's ongoing effort to simplify its size standards. Second,
SBA's current methodology examines the Federal procurement market as
one of the five primary factors in setting size standards for most
industries. Third, SBA has established separate size standards for
Federal procurement purposes within certain NAICS Sectors and
Industries. For example, for the Retail Trade and Wholesale Trade
Sectors, the 500 employee nonmanufacturer size standard applies for
procurements of manufactured products, and industry standards in those
sectors are generally used for SBA financial assistance programs. In
addition, for those industries where there is a need for significantly
different size standards for Federal procurement, they already exist.
SBA has in the past recognized the need for standards that apply only
to Federal procurement in certain industries, because the existing
standards, while appropriate for other Federal programs, were not
suitable for procurement purposes. Currently there are 18
``exceptions'' in the Agency's table of size standards that relate
directly to Federal procurement opportunities for small businesses.
Fourth, establishing separate size standards within each industry for
businesses that participate in Federal procurement and those that
participate in other programs is almost impractical due to lack of
necessary data. For example, the Economic Census data that SBA uses to
evaluate industry characteristics are limited to the six-digit NAICS
level. Similarly, the Federal procurement data from the FPDS-NG are
limited to identifying each contracting firm as ``small'' or ``other
than small'' only, with no information on its specific firm size (i.e.,
the number of employees and average annual revenues) that would be
needed to establish a separate size standard for Federal procurement
purposes.
The commenter also addressed the size standards for NAICS code
811213, Communication Equipment Repair and Maintenance, and NAICS code
811212, Computer and Office Repair Maintenance. SBA had proposed to
increase the standard for NAICS 811213 from $7 million to $10 million
in average annual receipts but did not propose to modify the standard
for NAICS 811212. There are similarities among NAICS 811212 and several
computer services related industries in Sector 54 (NAICS 541211, NAICS
541212, NAICS 541213 and NAICS 541219), as SBA detailed in the proposed
rule. Based on those similarities those four Sector 54 industries and
NAICS 811212 have shared a $25 million size standard since SBA last
reviewed the computer related services industries. SBA will review the
size standard for NAICS 811212 when it next reviews computer related
services in NAICS Sector 54. Therefore, SBA proposed to retain the
current $25 million standard for NAICS 811212 until it reviews Sector
54.
The commenter supported the current $25 million common size
standard for NAICS 811212, but requested SBA to apply the same $25
million size standard to NAICS 811213 and defer changing the current $7
million size standard for that industry as well until the Agency
analyzes and reviews size standards for the information technology
industries in Sector 54. SBA is adopting the proposed $10 million for
NAICS 811213 because it believes it should not defer its increase on
the basis of what it might determine is appropriate for industries in
another Sector that it has not yet analyzed. Furthermore, for Federal
government procurement purposes, the size standard applicable to a
contracting opportunity is determined by the principal purpose of the
procurement. See 13 CFR 121.402. It is not unusual for companies to
perform contracts in different NAICS codes that have different size
standards. The Central Contractor Registration database shows that many
companies can be small for some NAICS codes and not small for others.
[[Page 61593]]
NAICS is a production oriented system and classifies companies by
their economic activity, that is, by how they produce their products
and provide their services. Therefore, economic activities of
businesses classified in NAICS 811213 are more closely akin to
businesses classified in NAICS Sector 81 than they are to businesses
classified in other Sectors. Larger companies can and do perform
contracts under NAICS codes in different Sectors and Industries with
various size standards--some higher, some lower than others. However,
SBA believes it cannot logically conclude that the lower size standards
ought to be increased. The same reasoning might lead to lowering the
higher size standards.
Based on the analysis according to its ``Size Standards
Methodology,'' SBA has determined that $10 million is the appropriate
size standard for NAICS 811213. SBA believes that, at this level, there
exists a sufficient population of small firms that can compete among
themselves for opportunities that provide benefits for small
businesses. Much larger companies can and do provide some of the same
services as smaller companies, but SBA believes that raising the size
standard to include much larger firms would not be equitable for those
small businesses that the Agency seeks to support and protect.
Based on its analyses of relevant industry and Federal contracting
data, SBA has determined that the proposed $10 million size standard is
appropriate for NAICS 811213. Moreover, a size standard higher than the
$10 million level would create substantial competitive disadvantages
for small businesses below that level in bidding for Federal
procurement opportunities. Therefore, SBA is adopting as final its
proposed $10 million size standard for NAICS 811213.
Another commenter stated that SBA should not raise size standards
to enable Federal agencies to meet their small business contracting
goals. However, whether Federal agencies meet their goals or not is not
a factor SBA considers in its analysis. Once SBA has established small
business size standards, it is the various agencies' responsibility to
structure and monitor their contracting activities to meet their small
business contracting goals. SBA's objective is to assure that there are
an adequate number of small businesses to maintain suitable competition
among them. At the same time, SBA wants to make certain that the pool
is not too large so that there would be an inordinate number of
apparently small businesses. The commenter stated further that a
company with $7 million in receipts or one that has 500 employees is
not a small business and such levels might not suggest smallness for
many people. SBA draws the line of demarcation between small and other
than small where it will provide adequate procurement opportunities for
businesses below that level.
In the proposed rule, SBA requested comments on whether
simplification of size standards by reducing them to eight fixed levels
was appropriate. SBA also requested comments on whether it should, as a
policy, limit the amount of increase or decrease to a size standard,
and whether SBA should, as a policy, establish certain minimum or
maximum values for size standards.
One commenter suggested that there should be only one maximum
revenue based standard and one maximum employee based size standard,
regardless of NAICS industry. While this would simplify size standards
even more than what SBA had proposed, the Act, as noted above, states
in Sec. 3(a)(3) that ``the [SBA] Administrator shall ensure that the
size standard varies from industry to industry to the extent necessary
to reflect the differing characteristics of the various industries and
consider other factors deemed to be relevant by the Administrator.''
(15 U.S.C. 632(a)(3)). The relevant data show significant differences
among industries within each NAICS Sector, including Sector 81, and SBA
believes that varying the size standard by industry not only complies
with the Act, but it also serves the best interests of small businesses
in that Sector. Therefore, SBA does not presently plan to reduce the
number of receipts based size standard levels below eight as detailed
in the proposed rule.
SBA did not receive any comments on whether it should lower the
size standards for the 20 industries in NAICS Sector 81 for which SBA's
analyses supported reducing the existing size standards. SBA also did
not receive any comments on nine industries for which SBA's analyses
supported retaining the existing size standards and on NAICS 811212 for
which SBA had proposed retaining the current standard until it reviews
NAICS Sector 54. Therefore, SBA is retaining the existing size
standards for 28 of the 48 Industries in NAICS Sector 81. All comments
to the proposed rule are available for public review at http://www.regulations.gov.
Conclusion
Based on the analyses of relevant industry and program data and
public comments it received on the proposed rule, SBA has decided to
increase the small business size standards for the 18 industries in
NAICS Sector 81 to the levels it proposed. The revised size standards
are shown in the following table.
Summary of Revised Size Standards in NAICS Sector 81
------------------------------------------------------------------------
Current size Revised size
NAICS standard ($ standard ($
million) million)
------------------------------------------------------------------------
811122--Automotive Glass Replacement $7.0 $10.0
Shops..................................
811213--Communication Equipment Repair 7.0 10.0
and Maintenance........................
811219--Other Electronic and Precision 7.0 19.0
Equipment Repair and Maintenance.......
811412--Appliance Repair and Maintenance 7.0 14.0
812191--Diet and Weight Reducing Centers 7.0 19.0
812220--Cemeteries and Crematories...... 7.0 19.0
812320--Dry-cleaning and Laundry 4.5 5.0
Services (except Coin-Operated)........
812331--Linen Supply.................... 14.0 30.0
812332--Industrial Launderers........... 14.0 35.5
812921--Photo Finishing Laboratories 7.0 19.0
(except One-Hour)......................
812922--One-Hour Photo Finishing........ 7.0 14.0
812930--Parking Lots and Garages........ 7.0 35.5
813211--Grantmaking Foundations......... 7.0 30.0
813212--Voluntary Health Organizations.. 7.0 25.5
813219--Other Grant Making and Giving 7.0 35.5
Services...............................
813311--Human Rights Organizations...... 7.0 25.5
[[Page 61594]]
813312--Environment, Conservation and 7.0 14.0
Wildlife Organizations.................
813920--Professional Organizations...... 7.0 14.0
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Although there were two comments opposing the proposed increases,
SBA believes that its analyses warrants the increases, for the reasons
it gave in the October 21, 2009 proposed rule. SBA's proposed rule
indicated that its analysis might justify proposing reductions to size
standards for 20 industries in this Sector. However, SBA has opted not
to reduce the size standards for these industries for the reasons given
in the proposed rule. Lowering small business size standards would be
inconsistent with its ongoing effort to promote small business
assistance under the Recovery Act.
Compliance With Executive Orders 12866, 12988, and 13132, the Paperwork
Reduction Act (44 U.S.C., Ch. 35) and the Regulatory Flexibility Act (5
U.S.C. 601-612)
Executive Order 12866
The Office of Management and Budget (OMB) has determined that this
final rule is a ``significant'' regulatory action for purposes of
Executive Order 12866. Accordingly, the next section contains SBA's
Regulatory Impact Analysis. This is not a major rule, however, under
the Congressional Review Act, 5 U.S.C. 800.
Regulatory Impact Analysis
Is there a need for the regulatory action?
SBA believes that the adopted adjustments to certain size standards
in Sector 81, Other Services, better reflect the changes in economic
characteristics of small businesses in those industries. SBA provides
aid and assistance to small businesses through a variety of financial,
procurement, business development and advocacy programs. To assist the
intended beneficiaries of these programs effectively, SBA establishes
distinct definitions to determine which businesses are deemed small
businesses. The Small Business Act (15 U.S.C. 632(a)) delegates to
SBA's Administrator responsibility for establishing small business
definitions. The Act also requires that small business definitions vary
to reflect industry differences. The supplementary information section
of the proposed rule and this rule explained in detail SBA's
methodology for analyzing a size standard for a particular industry.
What are the potential benefits and costs of this regulatory action?
The most significant benefit to businesses obtaining small business
status as a result of this rule is eligibility for Federal small
business assistance programs, including SBA's financial assistance
programs, economic injury disaster loans and Federal procurement
opportunities reserved for small businesses. Federal procurement
provides opportunities for small businesses under SBA's business
development programs, such as 8(a) participantes, small businesses
located in Historically Underutilized Business Zones (HUBZone), women
owned small businesses and service disabled veteran owned small
businesses (SDVOSB). Other Federal agencies also may use SBA size
standards for a variety of regulatory and program purposes. Through the
assistance of these programs, small businesses become more
knowledgeable, stable and competitive.
Of 18 industries in Sector 81 for which SBA has increased their
size standards, 12 are for-profit industries and six are non-profits.
In the 12 for-profit industries for which SBA has increased size
standards, the Agency estimates that about 325 additional firms will
obtain small business status and become eligible for these programs.
That represents 0.6 percent of total firms and 5.6 percent of total
sales in those industries. In the six non-profit industries for which
size standards have been increased, SBA estimates that about 1,175
additional firms, representing 4.2 percent of total firms and 16.9
percent of total sales in those industries, will qualify as small
organizations (a non-profit entity cannot qualify as a small business
concern). 13 CFR 121.105 In the 20 industries (including non-profits)
for which SBA's analyses indicated a lower size standard is
appropriate, about 1,850 firms, representing 0.6 percent of total firms
and 5.1 percent of total sales in those industries, might have lost
their small business status, had SBA lowered their size standards.
Thus, the net impact for the Sector as a whole is about 1,400
additional firms gaining and none losing small business status under
this final rule. This will increase the small business share of total
industry receipts for the Sector from 59.0 percent under the current
size standards to 63.5 percent under the revised standards.
The benefits of increasing size standards to a more appropriate
level will accrue to three groups: (1) Businesses that are above the
current size standards will benefit by gaining small business status
under the higher size standards, thereby being able to participate in
Federal small business assistance programs; (2) growing small
businesses that are close to exceeding the current size standards will
be able to retain their small business status under the higher size
standards, thereby being able to continue their participation in the
programs; and (3) Federal agencies that award contracts under
procurement programs that require small business status.
More than 40 percent of total Federal contracting dollars received
by industries in Sector 81 (excluding NAICS 811212 and those in
Subsector 813) during fiscal years 2006-2008 were accounted for by two
of the 18 industries for which SBA is increasing size standards in this
final rule, namely NAICS 811213 and NAICS 811219. SBA estimates that
additional firms gaining small business status in those two and other
industries in Subsectors 811 and 812 under the proposed size standards
could potentially obtain Federal contracts totaling up to between $25
million and $30 million per year under the small business set-aside
program, the 8(a), HUBZone, and SDVOSB Programs, or unrestricted
procurements. The added competition for many of these procurements also
could likely result in lower prices to the Government for procurements
reserved for small businesses, but SBA cannot quantify this benefit.
Under SBA's 7(a) Guaranteed Loan Program and CDC Program, SBA
estimates that approximately 10 additional loans totaling between $4
million and $5 million in new Federal loan guarantees will be made to
newly defined small businesses. Because of the size of the loan
guarantees, however, most loans are made to small businesses
[[Page 61595]]
well below the size standard. SBA has also applied its CDC alternative
size standard to its 7(a) Business Loan Program, and more capital is
therefore available to small businesses. Thus, increasing the size
standards will likely result in an increase in small business
guaranteed loans to small businesses in these industries, but it would
be impractical to try to estimate the extent of their number and the
total amount loaned.
The newly defined small businesses will also benefit from SBA's
Economic Injury Disaster Loan (EIDL) Program. Since this program is
contingent on the occurrence and severity of disasters, no meaningful
estimate of benefits can be projected.
To the extent that 325 additional firms in Subsectors 811 and 812
that become small under the revised size standards could become active
in Federal procurement programs, this may entail some additional
administrative costs to the Federal Government. Additional firms will
likely participate in Federal procurement opportunities reserved for
small businesses, seek SBA guaranteed loans and SBA guaranteed surety
bonds in connection with Federal projects, register in the Central
Contractor Registration, be listed in the Dynamic Small Business Search
databases, and seek certification as 8(a) or HUBZone firms. Among
businesses in this group seeking SBA assistance, there could be
additional costs associated with compliance and verification of small
business status and protests of businesses that claim small business
standing. These additional costs are likely to be minimal because
mechanisms are already in place to handle these administrative
requirements.
The costs to the Federal Government may be higher on some Federal
contracts. With a greater number of businesses defined as small,
Federal agencies may choose to set aside more contracts for competition
among small businesses rather than using full and open competition. The
movement from unrestricted to set-aside contracting will likely result
in competition among fewer bidders. In addition, higher costs may
result when additional full and open contracts are awarded to HUBZone
businesses because of a price evaluation preference. The additional
costs associated with fewer bidders, however, will likely be minor
since, as a matter of law, procurements may be set aside for small
businesses or reserved for the 8(a) or HUBZone Programs only if awards
are expected to be made at fair and reasonable prices.
The adopted size standards may have some distributional effects
among large and small businesses. Although the actual outcome of the
gains and losses among small and large businesses cannot be estimated
with certainty, several likely impacts can be identified. There will
likely be a transfer of some Federal contracts from large businesses to
small businesses. Large businesses may have fewer Federal contract
opportunities as Federal agencies decide to set aside more Federal
contracts for small businesses. Also, some Federal contracts may be
awarded to HUBZone concerns instead of large businesses since HUBZone
concerns may be eligible for an evaluation adjustment for contracts
competed on a full and open basis. Similarly, currently defined small
businesses may obtain fewer Federal contracts due to the increased
competition from more businesses defined as small under the revised
size standards. This transfer may be offset by a greater number of
Federal procurements set aside for all small businesses. The number of
newly defined and expanding small businesses that are willing and able
to sell to the Federal Government will limit the potential transfer of
contracts away from large and currently defined small businesses. The
potential distributional impacts of these transfers may not be
estimated with any degree of precision because the currently available
data on the size of business receiving a Federal contract are limited
to identifying small or other than small businesses, without regard to
the exact size of the business.
The revisions to the existing size standards for Other Services
industries are consistent with SBA's statutory mandate to assist small
business. This regulatory action promotes the Administration's
objectives. One of SBA's goals in support of the Administration's
objectives is to help individual small businesses succeed through fair
and equitable access to capital and credit, Government contracts, and
management and technical assistance. Reviewing and modifying size
standards, when appropriate, ensures that intended beneficiaries have
access to small business programs designed to assist them.
Executive Order 12988: For purposes of Executive Order 12988, Civil
Justice Reform, SBA has determined that this rule is crafted, to the
extent practicable, in accordance with the standards set forth in
Sec. Sec. 3(a) and 3(b)(2), to minimize litigation, eliminate
ambiguity and reduce burden.
Executive Order 13132: For purposes of Executive Order 13132, SBA
has determined that this rule has no federalism implications warranting
preparation of a federalism assessment.
Paperwork Reduction Act: This interim final rule does not impose
any additional reporting or recordkeeping requirements under the
Paperwork Reduction Act, 44 USC Chapter 35.
Final Regulatory Flexibility Analysis
Under the Regulatory Flexibility Act (RFA), this rule may have a
significant impact on a substantial number of small entities in NAICS
Sector 81, Other Services. As described above, this rule may affect
small entities seeking Federal contracts, SBA (7a) and 504 Guaranteed
Loan Programs, SBA Economic Injury Disaster Loans, and other Federal
small business programs.
Immediately below, SBA sets forth a final regulatory flexibility
analysis of this final rule addressing the following questions: (1)
What is the need for and objective of the rule? (2) what is SBA's
description and estimate of the number of small entities to which the
rule will apply? (3) what are the projected reporting, record keeping,
and other compliance requirements of the rule? (4) what are the
relevant Federal rules which may duplicate, overlap or conflict with
the rule? and (5) what alternatives will allow the Agency to accomplish
its regulatory objectives while minimizing the impact on small
entities?
(1) What is the need for and objective of the rule?
Most of SBA's size standards for the Other Services industries have
not been reviewed since the early 1980s, and many have not been changed
since the 1960s, except for periodic adjustments for inflation.
Technology, productivity growth, international competition, mergers and
acquisitions, and updated industry definitions may have changed the
structure of many industries. Such changes can be sufficient to support
a revision to size standards for some industries. Based on an analysis
of the latest data available to the Agency, SBA believes that the
revised standards in this final rule more appropriately reflect the
size of businesses in those industries that need Federal assistance.
(2) What is SBA's description and estimate of the number of small
entities to which the rule will apply?
In this final rule, SBA estimates that approximately 1,400
additional firms will become small because of increases in size
standards in the 18 industries within Sector 81. That represents about
1.8 percent of approximately 75,500 total firms in those industries.
This will
[[Page 61596]]
result in an increase in the small business share of total industry
receipts for that Sector from 59.0 percent under the current size
standards to 63.5 percent under the revised standards.
(3) What are the projected reporting, recordkeeping, and other
compliance requirements of the rule and an estimate of the classes of
small entities which will be subject to the requirements?
A new size standard does not impose any additional reporting or
recordkeeping requirements on small entities. However, qualifying for
Federal procurement and a number of other programs requires that
entities register in the Central Contractor Registration (CCR) database
and certify at least annually that they are small in the Online
Representations and Certifications Application (ORCA). Therefore,
businesses opting to participate in those programs must comply with CCR
and ORCA requirements. There are no costs associated with either CCR
registration or ORCA certification. Revising size standards alters the
access to SBA programs that assist small businesses, but does not
impose a regulatory burden as they neither regulate nor control
business behavior.
(4) What are the relevant Federal rules which may duplicate, overlap or
conflict with the rule?
This rule overlaps with other Federal rules that use SBA's size
standards to define a small business. Under Sec. 3(a)(2)(C) of the
Small Business Act, 15 U.S.C. 632(a)(2)(C), Federal agencies must use
SBA's size standards to define a small business, unless specifically
authorized by statute. 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, dated November 24, 1995). SBA is
not aware of any Federal rule that would duplicate or conflict with
establishing size standards.
However, the Small Business Act and SBA's regulations allow Federal
agencies to develop different size standards if they believe that SBA's
size standards are not appropriate for their programs, with the
approval of SBA's Administrator (13 CFR 121.903). The Regulatory
Flexibility Act authorizes an Agency to establish an alternative small
business definition, after consultation with the Office of Advocacy of
the U.S. Small Business Administration (5 U.S.C. 601(3)). Thus, there
may be instances where this rule conflicts with other rules.
(5) What alternatives will allow the Agency to accomplish its
regulatory objectives while minimizing the impact on small entities?
By law, SBA is required to develop numerical size standards for
establishing eligibility for Federal small business assistance
programs. Other than varying size standards by industry and changing
the size measures, no alternative exists to the systems of numerical
size standards.
List of Subjects in 13 CFR Part 121
Administrative practice and procedure, Government procurement,
Government property, Grant programs--business, Individuals with
disabilities, Loan programs--business, Reporting and recordkeeping
requirements, Small businesses.
0
For reasons set forth in the preamble, SBA amends 13 CFR part 121 as
follows:
PART 121--SMALL BUSINESS SIZE REGULATIONS
Subpart A--Size Eligibility Provisions and Standards
0
1. The authority citation for part 121 continues to read as follows:
Authority: 15 U.S.C. 632, 634(b)(6), 636(b), 637(a), 644,
657(a), 657(f), and 662(5); and Pub. L. 105-135, Sec. 401, et seq.,
111 Stat, 2592.
0
2. In Sec. 121.201, in the table, revise the entries for ``811122'',
``811213'', ``811219'', ``811412'', ``812191'', ``812220'', ``812320'',
``812331'', ``812332'', ``812921'', ``812922'', ``812930'', ``813211'',
``813212'', ``813219'', ``813311'', ``813312'', and ``813920'' to read
as follows:
Sec. 121.201 What size standards has SBA identified by North American
Industry Classification System codes?
* * * * *
Small Business Size Standards by NAICS Industry
------------------------------------------------------------------------
Size standards Size standards
NAICS codes NAICS U.S. industry in millions of in number of
title dollars employees
------------------------------------------------------------------------
* * * * * * *
811122.......... Automotive Glass $10.0 ..............
Replacement Shops.
* * * * * * *
811213.......... Communication 10.0 ..............
Equipment Repair and
Maintenance.
811219.......... Other Electronic and 19.0 ..............
Precision Equipment
Repair and
Maintenance.
* * * * * * *
811412.......... Appliance Repair and 14.0 ..............
Maintenance.
* * * * * * *
812191.......... Diet and Weight 19.0 ..............
Reducing Centers.
* * * * * * *
812220.......... Cemeteries and 19.0 ..............
Crematories.
* * * * * * *
812320.......... Dry-cleaning and 5.0 ..............
Laundry Services
(except Coin-
Operated).
812331.......... Linen Supply.......... 30.0 ..............
812332.......... Industrial Launderers. 35.5 ..............
* * * * * * *
812921.......... Photo Finishing 19.0 ..............
Laboratories (except
One-Hour).
[[Page 61597]]
812922.......... One-Hour Photo $14.0 ..............
Finishing.
812930.......... Parking Lots and 35.5 ..............
Garages.
* * * * * * *
813211.......... Grantmaking 30.0 ..............
Foundations.
813212.......... Voluntary Health 25.5 ..............
Organizations.
813219.......... Other Grant Making and 35.5 ..............
Giving Services.
813311.......... Human Rights 25.5 ..............
Organizations.
813312.......... Environment, 14.0 ..............
Conservation and
Wildlife
Organizations.
* * * * * * *
813920.......... Professional 14.0 ..............
Organizations.
* * * * * * *
------------------------------------------------------------------------
Dated: September 10, 2010.
Marie C. Johns,
Deputy Administrator.
[FR Doc. 2010-24860 Filed 10-5-10; 8:45 am]
BILLING CODE 8025-01-P