Tuesday, December 24, 2013

SBA Revises Size Standards for Utilities and Construction Sectors

SBA Revises Size Standards for Utilities and Construction Sectors

The U.S. Small Business Administration (SBA) issued two final rules in the Federal Register today, revising size standards for firms in two North American Industry Classification System (NAICS) sectors, namely, Utilities (Sector 22) and Construction (Sector 23).

Size standards define the maximum size a firm can be and still be considered a small business. The revised standards reflect changes in marketplace conditions and public comments that SBA received to its earlier proposed rules.

New size standards will enable more businesses in these sectors to obtain or retain small business status; will give federal agencies a larger pool of small businesses from which to choose for their procurement programs; and will make more small businesses eligible for SBA’s loan programs.

For industries in Sector 22, Utilities, SBA increased revenue-based size standards for three industries and changed the basis for determining business size from megawatt hours to number of employees in 10 electric power generation, transmission, and distribution industries. SBA retained the current 500 employee size standard for the one remaining industry (NAICS 221210) in the sector.

The final rule also removes Footnote 1 from SBA’s Table of Size Standards, which stated that a firm was small if it, including its affiliates, was primarily engaged in the generation, transmission, and/or distribution of electric energy for sale and its total electric output for the preceding fiscal year did not exceed 4 million megawatt hours.

More than 400 additional firms will qualify as small under these new size standards for Utilities and become eligible for SBA’s loan and federal procurement programs.

A summary of current and revised size standards in sector 22, Utilities can be found HERE.

The SBA increased two size standards in Sector 23 (Construction) and retained the current size standards for the remaining industries in the sector. Specifically, SBA increased the size standards from $7 million to $25 million for firms in the Land Subdivision industry, and from $20 million to $25.5 million for businesses engaged in Dredging and Surface Cleanup activities, which is an "exception" to the size standard for NAICS 237990, Other Heavy and Civil Engineering Construction.

Nearly 500 additional firms will qualify as small under the new construction size standards and become eligible for SBA’s loan and federal procurement programs.

A summary of current and revised size standard in sector 23, Construction can be found HERE.

The new small business size standards will be effective January 22, 2014. To review the rules and public comments, go to www.regulations.gov. Each final rule has a separate RIN number, specifically:
Sector 22, Utilities – (RIN 3245-AG25).
Sector 23, Construction – (RIN 3245-AG37).

The SBA is reviewing size standards by taking into account the structural characteristics of individual industries, including average firm size, the degree of competition, and federal government contracting trends. This ensures that small business size definitions reflect current economic and market conditions in those industries. The Small Business Jobs Act of 2010 requires SBA to review all size standards at least every five years.
SBA issued a “Size Standards Methodology” White Paper, which explains how SBA establishes, reviews and modifies its small business size standards. This paper is available online at http://www.sba.gov/size. Also available on this site is the latest about SBA’s revisions to small business size standards. For details click on the article “What’s New with Size Standards.”

1 comment:

Chuck Blakeman said...

Not once in the 60+ years of the "Small" Business Administration's history have they made a ruling that reduced the definition of "small". The SBA, like everyone else in Washington, is enamored with and beholden to large corporations.

There are 28 million businesses in America with 1-19 employees (98%) and only a couple hundred thousand with 100-500 employees (less than 2%). Yet almost all of the SBA's activity is focused on that tiny segment of very large businesses.

This is the same worn out story we've been fed for decades; the SBA working with large corporations to figure out how to get them re-qualified as "small" so they can get special interest treatment and huge low-interest loans, all of which serves to crush the true small businesses who have access to almost nothing in the SBA anymore.

In the last five years loans under $250,000 (the loans true small businesses need) have decreased every year. Further, loans under $150,000 have gone from 24% of the SBA's budget to 7% this year. And finally, in 2013 the SBA backed fewer loans under $100,000 than at any time in their history.

It would be a refreshing approach for a journalist to stop blowing the SBA's horn for cow-towing to giant corporations, and instead admonish them for having deserted true small businesses with 1-19 employees.