Federal Register / Vol. 87, No. 62 / Thursday, March 31, 2022 / Rules and Regulations 18665 

1On December 21, 2021, the U. S. Office of 

Management and Budget (OMB) published its 

‘‘Notice of NAICS 2022 Final Decisions . . .’’ (86 

FR 72277), accepting the Economic Classification 

Policy Committee (ECPC) recommendations, as 

outlined in the July 2, 2021, Federal Register notice 

(86 FR 35350), for the 2022 revisions to the North 

American Industry Classification System (NAICS), 

. . . .’’ In the near future, SBA will issue a proposed 

rule to adopt the OMB NAICS 2022 revisions for its 

table of size standards. SBA anticipates updating its 

size standards with the NAICS 2022 revisions, 

effective October 1, 2022. 

SMALL BUSINESS ADMINISTRATION 

13 CFR Part 121 

RIN 3245–AG91 

Small Business Size Standards: 

Professional, Scientific and Technical 

Services; Management of Companies 

and Enterprises; Administrative and 

Support and Waste Management and 

Remediation Services 

AGENCY: U.S. Small Business 

Administration. 

ACTION: Final rule. 

SUMMARY: The U.S. Small Business 

Administration (SBA) is increasing its 

receipts-based small business size 

definitions (commonly referred to as 

‘‘size standards’’) for North American 

Industry Classification System (NAICS) 

sectors related to Professional, Scientific 

and Technical Services; Management of 

Companies and Enterprises; 

Administrative and Support and Waste 

Management and Remediation Services. 

Specifically, SBA is increasing the size 

standards for 46 industries in those 

sectors, including 27 industries in 

NAICS Sector 54 (Professional, 

Scientific and Technical Services), two 

industries in Sector 55 (Management of 

Companies and Enterprises), and 17 

industries in Sector 56 (Administrative 

and Support and Waste Management 

and Remediation Services). 

DATES: This rule is effective May 2, 

2022. 

FOR FURTHER INFORMATION CONTACT: 

Samuel Castilla, Economist, Office of 

Size Standards, (202) 205–6618 or 

sizestandards@sba.gov. 

SUPPLEMENTARY INFORMATION: 

Discussion of Size Standards 

To determine eligibility for Federal 

small business assistance, SBA 

establishes small business size 

definitions (usually referred to as ‘‘size 

standards’’) for private sector industries 

in the United States. SBA uses two 

primary measures of business size for 

size standards purposes: Average annual 

receipts and average number of 

employees. SBA uses financial assets for 

certain financial industries and refining 

capacity, in addition to employees, for 

the petroleum refining industry to 

measure business size. In addition, 

SBA’s Small Business Investment 

Company (SBIC), Certified Development 

Company (504), and 7(a) Loan Programs 

use either the industry-based size 

standards or tangible net worth and net 

income-based alternative size standards 

to determine eligibility for those 

programs. 

In September 2010, Congress passed 

the Small Business Jobs Act of 2010 

(Pub. L. 111–240, 124 Stat. 2504, 

September 27, 2010) (‘‘Jobs Act’’), 

requiring SBA to review all size 

standards every five years and make 

necessary adjustments to reflect current 

industry and market conditions. In 

accordance with the Jobs Act, in early 

2016, SBA completed the first five-year 

review of all size standards—except 

those for agricultural enterprises for 

which size standards were previously 

set by Congress—and made appropriate 

adjustments to size standards for a 

number of industries to reflect current 

industry and Federal market conditions. 

SBA also adjusts its monetary-based size 

standards for inflation at least once 

every five years. An interim final rule 

on SBA’s latest inflation adjustment to 

size standards, effective August 19, 

2019, was published in the Federal 

Register on July 18, 2019 (84 FR 34261). 

SBA also updates its size standards 

every five years to adopt the Office of 

Management and Budget’s (OMB) 

quinquennial North American Industry 

Classification System (NAICS) revisions 

to its table of small business size 

standards. Effective October 1, 2017, 

SBA adopted the OMB’s 2017 NAICS 

revisions to its size standards (82 FR 

44886, September 27, 2017).1

This final rule is one of a series of 

final rules that will revise size standards 

of industries grouped by various NAICS 

sectors. Rather than revise all size 

standards at one time, SBA is revising 

size standards by grouping industries 

within various NAICS sectors that use 

the same size measure (i.e., employees 

or receipts). In the prior review, SBA 

revised size standards mostly on a 

sector-by-sector basis. As part of the 

second five-year review of size 

standards, SBA reviewed all receiptbased size standards in NAICS Sector 54 

(Professional, Scientific and Technical 

Services), Sector 55 (Management of 

Companies and Enterprises), and Sector 

56 (Administrative and Support and 

Waste Management and Remediation 

Services) to determine whether the 

existing size standards should be 

retained or revised based on the current 

industry and Federal market data. After 

its review, SBA published in the 

November 13, 2020, issue of the Federal 

Register (85 FR 72584) a proposed rule 

to increase the size standards for 27 

industries in NAICS Sector 54, two 

industries in Sector 55, and 17 

industries in Sector 56. In this final rule, 

SBA is adopting the proposed size 

standards from the November 2020 

proposed rule without change. 

In conjunction with the current 

comprehensive size standards review, 

SBA developed a revised ‘‘Size 

Standards Methodology’’ (Methodology) 

for developing, reviewing, and 

modifying size standards, when 

necessary. SBA’s revised Methodology 

provides a detailed description of its 

analyses of various industry and 

program factors and data sources, and 

how the agency uses the results to 

establish and revise size standards. In 

the proposed rule itself, SBA detailed 

how it applied its revised Methodology 

to review and modify where necessary, 

the existing size standards for industries 

covered in this final rule. Prior to 

finalizing the revised Methodology, SBA 

issued a notification in the April 27, 

2018, edition of the Federal Register (83 

FR 18468) to solicit comments from the 

public and notify stakeholders of the 

proposed changes to the Methodology. 

SBA considered all public comments in 

finalizing the revised Methodology. For 

a summary of comments and SBA’s 

responses, refer to the SBA’s April 11, 

2019, Federal Register notification (84 

FR 14587) of the issuance of the final 

revised Methodology. SBA’s ‘‘Size 

Standards Methodology’’ white paper is 

available on its website at www.sba.gov/ 

size. 

In evaluating an industry’s size 

standard, SBA examines its 

characteristics (such as average firm 

size, startup costs, industry competition 

and distribution of firms by size) and 

the small business level and share of 

Federal contract dollars in that industry. 

SBA also examines the potential impact 

a size standard revision might have on 

its financial assistance programs, and 

whether a business concern under a 

revised size standard would be 

dominant in its industry. SBA analyzed 

the characteristics of each receipt-based 

industry in NAICS Sectors 54, 55, and 

56, mostly using a special tabulation 

obtained from the U.S. Bureau of the 

Census from its 2012 Economic Census 

(the latest available). The 2012 special 

tabulation contains information for 

different levels of NAICS categories on 

average and median firm size in terms 

of both receipts and employment, total 

receipts generated by the four and eight 

largest firms, the Herfindahl-Hirschman 

Index (HHI), the Gini coefficient, and 


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18666 Federal Register / Vol. 87, No. 62 / Thursday, March 31, 2022 / Rules and Regulations 

size distributions of firms by various 

receipts and employment size 

groupings. To evaluate average asset 

size, SBA combines the sales to total 

assets ratios by industry, obtained from 

the Risk Management Association’s 

(RMA) Annual eStatement Studies 

(http://www.rmahq.org/estatementstudies/) with the simple average 

receipts size by industry from the 2012 

Economic Census tabulation to estimate 

the average assets size for each industry. 

SBA also evaluated the small business 

level and share of Federal contracts in 

each of the industries using data from 

the Federal Procurement Data System— 

Next Generation (FPDS–NG) for fiscal 

years 2016–2018. 

Table 4 of the November 2020 

proposed rule (85 FR 72584), Size 

Standards Supported by Each Factor for 

Each Industry (Receipts), shows the 

results of analyses of industry and 

Federal contracting factors for each 

industry and subindustry (exception) 

covered by the proposed rule. Of the 91 

industries and three subindustries (i.e., 

exceptions) reviewed in the proposed 

rule, the results from analyses of the 

latest available data on the five primary 

factors supported increasing size 

standards for 46 industries, decreasing 

size standards for 40 industries and two 

subindustries, and maintaining size 

standards for six remaining industries. 

Table 1, Summary of Calculated Size 

Standards, summarizes the analytical 

results from the proposed rule by 

NAICS sector. 

TABLE 1—SUMMARY OF CALCULATED SIZE STANDARDS

NAICS sector Sector name 

Number of 

size standards 

reviewed 

Number of 

size standards 

increased 

Number of 

size standards 

decreased 

Number of 

size standards 

maintained 

54 .................... Professional, Scientific and Technical Services ................ 48 27 18 3 

55 .................... Management of Companies and Enterprises .................... 2 2 0 0 

56 .................... Administrative and Support and Waste Management and 

Remediation Services.

44 17 24 3 

All Sectors ............................................................................................. 94 46 42 6 

In the November 2020 proposed rule, 

SBA discussed the impacts of the 

COVID–19 pandemic on small 

businesses and society in general. 

Recognizing the wide-ranging economic 

impact of the pandemic, SBA decided 

not to lower any size standards 

notwithstanding analysis that suggested 

lowering them. Instead, SBA proposed 

to maintain all size standards for 

industries in which the analytical 

results supported a decrease or no 

change to size standards and adopt all 

size standards for which the analytical 

results supported an increase to size 

standards. To evaluate the impact of the 

changes to size standards adopted in 

this final rule on Federal contracting 

and SBA’s loan programs, SBA analyzed 

FPDS–NG data for fiscal years 2018– 

2020 and its internal data on its loan 

programs for fiscal years 2018–2020. 

The results of that analysis can be found 

in the Regulatory Impact Analysis 

section of this final rule. 

In the proposed rule, SBA sought 

comments on its proposal to increase 

size standards for 46 industries, and 

retain the current size standards for the 

remaining 48 industries or subindustries 

in Sectors 54, 55, and 56. Specifically, 

SBA requested comments on whether 

the proposed revisions are appropriate 

for the industries covered by the 

proposed rule; whether the decision not 

to lower any size standards is justified 

by the consideration of the impact of the 

COVID–19 pandemic on small 

businesses and overall economy; 

whether the equal weighting of 

individual factors to derive an industry 

size standard is appropriate; and 

whether the data sources used were 

appropriate or sufficient. 

Discussion of Comments 

SBA received a total of 93 comments 

to the proposed rule from a wide range 

of entities, including individuals, 

businesses/corporations, trade 

associations, and academic institutions. 

Of the 93 comments received, ten 

comments were either invalid (blank) or 

not relevant to the proposed rule and 

three comments were submitted twice. 

Among the remaining 80 unique and 

pertinent comments, 45 referenced to 

the size standard for NAICS 541330, six 

to NAICS 541310, 24 to NAICS 541930, 

six to other industries, including NAICS 

541810, 541611, 541990, and 541350, 

and six did not specify any 6-digit 

NAICS code. Of the 80 pertinent 

comments to the proposed rule, 45 or 

56% expressed support for the proposed 

changes; 16 or 20% opposed the 

proposed changes; 16 or 20% expressed 

mixed support or suggested alternatives; 

and the rest took other positions or 

raised other issues. Comments also 

included a submission from SBA 

detailing a December 17, 2020, meeting 

that occurred between SBA and a trade 

association regarding SBA’s size 

standard methodology and its 

calculations used in deriving the 

proposed size standard for engineering 

services. All comments are available at 

www.regulations.gov (RIN 3245–AG91) 

and are summarized and discussed 

below. 

Comments on Proposed Changes to 

NAICS 541310—Architectural Services 

and NAICS 541350—Building 

Inspection Services 

SBA received a total of six comments 

to its proposal to increase the size 

standard for NAICS 541310 

(Architectural Services) from $8 million 

to $11 million. All commenters 

supported an increase to the size 

standard; however, two commenters 

recommended that SBA adopt a larger 

increase while the remaining four 

commenters supported increasing the 

size standard to the proposed $11 

million level. Of the four comments 

fully supporting the SBA’s proposal, 

three stated that the SBA’s analysis and 

proposed $11 million size standard 

appropriately reflect the current 

industry characteristics and market 

conditions in NAICS 541310. Three 

commenters also expressed support for 

the SBA’s proposed increase to the size 

standard for NAICS 541350 (Building 

Inspection Services) from $8 million to 

$10 million but did not provide any 

specific data or analysis relevant to that 

industry. 

One commenter in support of the 

SBA’s proposed increase to the size 

standard for NAICS 541310 expressed 

that the current size standard makes it 

difficult for small architectural firms to 

compete in the Federal marketplace 

upon graduating from the size standard, 

especially when competing with firms 

that are tens or hundreds of times larger 

than they are. The commenter 

concluded that the SBA’s proposed 

increase would benefit all small 


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companies, providing larger small 

businesses with an opportunity to 

successfully graduate from the size 

standard while still protecting smaller 

small businesses from competing with 

dominant firms. Another commenter 

expressed support for the SBA’s 

proposal based on the impacts on 

emerging companies, maintaining that 

the proposed size standard is 

appropriate, and it will encourage new 

entrants to the Federal marketplace. 

Commenters in support of a size 

standard higher than the SBA’s 

proposed size standard of $11 million 

for NAICS 541310 included an 

anonymous commenter and an 

architectural and engineering services 

firm. These commenters recommended 

that SBA increase the size standard for 

NAICS 541310 to at least $22.5 million 

to match the proposed size standard for 

NAICS 541330 (Engineering Services). 

One commenter argued that the SBA’s 

proposed size standard does not 

adequately prepare firms graduating 

from the size standard to compete with 

larger and more established firms under 

full and open competition. This 

commenter also expressed that a higher 

size standard is necessary to account for 

the large volume of subcontracting 

dollars that flow from architectural 

firms to engineering firms and suggested 

that SBA explore ways to modify its 

definition of receipts to allow for the 

exclusion of amounts paid to third-party 

subcontractors. Another commenter 

expressed similar concerns to those 

mentioned above and recommended 

that SBA establish a common size 

standard between NAICS 541310 

(Architectural Services) and NAICS 

541330 (Engineering Services) to better 

reflect the similarities between the two 

industries. 

SBA’s Response 

SBA agrees with commenters that the 

proposed $11 million size standard for 

NAICS 541310 would benefit all small 

firms. A larger size standard will extend 

the time that small firms can remain 

small and increase the number of firms 

eligible for SBA’s assistance intended 

for small businesses. As a result of this 

expanded runway, small firms can 

acquire more experience and technical 

capabilities to be able to compete with 

larger firms upon graduation from the 

size standard. Moreover, with an 

expanded pool of small businesses, the 

Federal Government will have more 

qualified small businesses to choose 

from, and as a result, will likely set 

aside more contracts for small 

businesses, thereby increasing Federal 

opportunities for all small businesses. 

SBA disagrees with commenters that 

the size standard for Engineering 

Services should be aligned with other 

industries, such as Architectural 

Services, that may perform similar 

activities. Although Engineering and 

Architectural Services are often codependent business activities, SBA’s 

analysis of these industries, as detailed 

in Table 4 of the November 2020 

proposed rule, demonstrates that the 

industry structures and economic 

characteristics of the firms providing 

architectural and engineering services 

are markedly different, justifying a 

unique size standard for each industry. 

SBA discusses these differences in more 

detail in the response to comments to 

NAICS 541330, below. 

As discussed in detail in the response 

to comments on NAICS 541330 (below), 

as part of the first five-year review of 

size standards under the Jobs Act, SBA 

proposed a common $19 million size 

standard for NAICS 541310, NAICS 

541330, and other industries in NAICS 

Industry Group 5413 (Architectural, 

Engineering, and Related Services), 

which was overwhelmingly rejected by 

commenters on the grounds that these 

industries are vastly different, and each 

industry should have a unique size 

standard. 

SBA does not agree with commenters 

that firms just above the current or 

proposed size standard are not 

competitive in the Federal marketplace. 

SBA analyzed the data from FPDS–NG 

for fiscal years 2018–2020 to determine 

the range of Federal contracting 

opportunities available to architectural 

firms above the current or proposed size 

standard. These results are presented in 

Table 2, Distribution of Contracting 

Dollars and Industry Receipts by Firm 

Size in NAICS 541310. SBA’s analysis 

showed that 49.4% of the total dollars 

obligated to NAICS 541310 went to 

firms below the proposed $11 million 

size standard and 56.6% of the total 

dollars obligated went to firms below 

the commenters’ suggested size standard 

of $22.5 million. The data shows that 

there is not a disproportionate share of 

Federal contracting opportunities 

available to firms that have exceeded 

the size standard. For example, based on 

the FPDS–NG data for fiscal years 2018– 

20, SBA determined that 15.6% of the 

total dollars obligated to NAICS 541310 

went to firms above the current $8 

million size standard but below the 

$22.5 million size standard suggested by 

commenters. Using the 2012 Economic 

Census special tabulation, SBA 

determined that 18% of total industry 

receipts in NAICS 541310 went to firms 

above the current $8 million size 

standard but below the $22.5 million 

size standard suggested by commenters. 

Similarly, 50.6% of total contract 

dollars and 44.1% of total receipts in 

NAICS 541310 went to firms above the 

proposed $11 million size standard. 

TABLE 2—DISTRIBUTION OF CONTRACTING DOLLARS AND INDUSTRY RECEIPTS BY FIRM SIZE IN NAICS 541310 

Firm size in receipts ($ million) 

Total dollars 

obligated 

($ million) 

Share of 

total dollars 

obligated 

(%) 

Total industry 

receipts 

($ million) 

Share of total 

industry 

receipts 

(%) 

<= $8.0 ............................................................................................................. 361 41.0 14,231 50.6 

>$8.0 and <= $11.0 ......................................................................................... 74 8.4 1,490 5.3 

>$11.0 and <= $22.5 ....................................................................................... 64 7.2 3,568 12.7 

>$22.5 .............................................................................................................. 382 43.4 8,840 31.4 

Total .......................................................................................................... 882 100 28,129 100 

Thus, based on SBA’s methodology 

for evaluating size standards, SBA finds 

that there are adequate Federal 

contracting opportunities for small firms 

at the current or proposed size standard 

that have graduated from their small 

business size status because the share of 

Federal contracting dollars being 

awarded to small firms in that size range 

is generally proportionate to their 

respective share of industry receipts. 

Table 2 summarizes these results. 

Regarding the comment that SBA 

should modify its definition of receipts 

to allow for the exclusion of amounts 


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18668 Federal Register / Vol. 87, No. 62 / Thursday, March 31, 2022 / Rules and Regulations 

paid to third-party subcontractors 

(usually referred to as ‘‘pass- throughs’’), 

SBA disagrees. SBA does not allow for 

the exclusion of pass-throughs because 

they are part of the usual and customary 

costs of doing business. SBA 

acknowledges that the architectural and 

engineering services industries may 

have more subcontracting costs than 

other industries. Accordingly, SBA 

considers ‘‘pass-throughs,’’ and other 

similar factors, as secondary factors 

when it establishes small business size 

standards. Specifically, the Economic 

Census data that SBA uses in its size 

standards analysis includes all revenues 

received by companies, including the 

values of their subcontracts. If the passthroughs were allowed to be excluded 

from the calculation of receipts, SBA 

would also have to revise its 

methodology to establish a lower size 

standard to reflect the size of the 

industry without them. Thus, SBA does 

not believe it is reasonable to exclude 

these costs from the calculation of 

receipts. 

For the reasons stated above, SBA is 

adopting the proposed $11 million size 

standard for NAICS 541310 without 

change. Similarly, in the absence of 

opposing comments, SBA is also 

adopting the $10 million size standard 

for NAICS 541350, as proposed. 

Comments on Proposed Changes to 

NAICS 541330—Engineering Services 

SBA received a total of 45 comments 

on its proposal to increase the size 

standard for NAICS 541330 

(Engineering Services) from $16.5 

million to $22.5 million. Of those 45 

comments, 24 expressed support for the 

proposed increase, six opposed the 

proposal, 14 expressed mixed support 

for the proposal, and one comment was 

from SBA. Of the 14 comments 

expressing mixed support for the SBA’s 

proposed $22.5 million size standard for 

this industry, 12 comments (which were 

almost identical) petitioned SBA to 

further increase the size standard for 

NAICS 541330 to at least $39.5 million. 

One of these 12 comments was 

submitted on behalf of the 12 

engineering companies, several of 

which also submitted their own 

comment including more or less the 

same information. The comments also 

included a submission from SBA 

detailing a meeting that occurred during 

the comment period between SBA and 

an engineering industry trade 

association regarding SBA’s size 

standard methodology and its 

calculations used in deriving the 

proposed size standard for the 

Engineering Services industry. The 

same trade association also submitted 

its own comment detailing its concerns 

with the data and approach SBA used 

to analyze the size standard for NAICS 

541330. SBA summarizes these 

comments and provides its responses 

below. 

Comments Supporting the Proposed 

$22.5 Million Size Standard 

Of the 45 comments concerning the 

size standard for NAICS 541330, 24 

fully supported the SBA’s proposal to 

increase that size standard from $16.5 

million to $22.5 million. Commenters’ 

support for SBA’s proposal focused on 

four main arguments: (1) Increasing the 

size standard would allow existing 

small firms to retain their small 

business status for an extended period; 

(2) The proposed increase would allow 

firms to gain more experience before 

graduating from the size standard; (3) 

Increasing the size standard would 

increase the number of small firms and 

the number of small business set-aside 

opportunities; and (4) The proposed 

increase accurately reflects the changes 

to industry structure that have occurred 

since the last review of the size 

standard. SBA discusses these 

comments and its responses below. 

(1) Increasing the size standard would 

allow existing small firms to retain their 

small business status for an extended 

period. 

At least four commenters supported 

SBA’s proposal to increase the size 

standard for NAICS 541330 to $22.5 

million on the grounds that it would 

allow small firms to retain their small 

business status for a longer period. 

These commenters expressed the 

challenges of competing for contracts 

under full and open competition against 

firms many times greater than the size 

threshold for the industry, and thus, 

petitioned SBA to adopt the proposed 

increase so that small firms could retain 

access to SBA’s procurement programs 

for a longer period. Moreover, some 

commenters argued that lowering the 

size standard, and thus, shortening the 

period that firms could retain their 

small status, could harm the Federal 

government by reducing the pool of 

experienced and qualified small 

contractors eligible to help Federal 

agencies carry out their missions. 

SBA’s Response 

SBA agrees with commenters that its 

proposal to increase the size standard 

for NAICS 541330 from $16.5 million to 

$22.5 million will help small businesses 

in the industry, especially those near 

the size standard, to retain access to 

SBA’s procurement and financial 

assistance programs for a longer period. 

SBA believes that by expanding the 

period for firms to qualify as small, a 

higher size standard will likely benefit 

the Federal government by increasing 

the number of qualified small 

businesses eligible for set-aside 

opportunities. Moreover, SBA also 

believes that the proposed increase will 

also benefit all small businesses in the 

industry as the Federal Government is 

likely to set aside more contracting 

opportunities for small businesses 

because of the availability of an 

expanded pool of experienced small 

firms. 

(2) The proposed increase would 

allow firms to gain more experience 

before graduating from the size 

standard. 

A few commenters in support of the 

proposed increase to the size standard 

for this industry stated that the 

proposed action would benefit existing 

small firms that are presently 

approaching the size standard by 

allowing them to gain more 

qualifications and capabilities before 

graduating from the size standard. These 

commenters expressed the importance 

of the expanded runway as it would 

allow existing small firms more time to 

develop their resume, which in turn, 

would help them compete with larger 

firms under full and open competition 

upon graduation from the small 

business status. Commenters also 

discussed the impact on small firms of 

Qualifications-Based Selections (QBS) 

requirements under the Brooks Act. 

These commenters expressed that the 

QBS criteria, established by the Brooks 

Act of 1972 (Pub. L. 92–582), tend to 

favor large firms with more 

qualifications because it requires 

selection based on qualifications alone, 

with the price negotiated only after the 

most qualified firm is selected. These 

commenters argued that increasing the 

size standard to $22.5 million would 

allow existing small firms to obtain 

more project experience and expand the 

number of staff with specialized 

engineering expertise necessary to be 

more competitive with larger firms 

under the QBS environment. Other 

commenters expressed similar reasoning 

in their support for the SBA’s proposed 

increase to the size standard for NAICS 

541330. For example, an engineering 

firm commented that the SBA’s 

proposal would foster robust 

competition in the Federal market by 

making it less onerous for firms to 

transition from small to the other-thansmall status. One architectural firm 

commented that the current size limits 

are too small for firms to acquire 

qualifications and capabilities needed to 

compete for medium or large 

contracting opportunities and expressed 


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that the proposed higher size standard 

would help small businesses survive 

upon graduating from the size standard. 

SBA’s Response 

SBA agrees with commenters that the 

proposed size standard would allow 

small firms to gain more qualifications 

and capabilities before graduating from 

the size standard. Due to this expanded 

runway provided by the higher 

proposed size standard, firms will be 

able to acquire more experience and 

technical capabilities to compete with 

larger firms upon their graduation from 

their small business status. SBA 

recognizes that the Brooks Act is an 

important factor affecting the 

competition in the Federal marketplace 

for this industry. SBA believes that, 

with the expanded runway provided by 

the proposed increase to the size 

standard, small firms will be able to 

gain more qualifications and experience 

and become more competitive for 

contracts covered under the Brooks Act. 

(3) Increasing the size standard would 

increase the number of small firms and 

the number of small business set-aside 

opportunities. 

Of the 24 comments in support of the 

proposed increase to the size standard 

for NAICS 541330, four comments 

expressed support based on the 

proposal’s impact on set-aside 

opportunities. One commenter 

explained that SBA’s proposal to 

increase the size standard for NAICS 

541330 would increase the number of 

qualified small companies competing 

for contracts in this industry and 

provide the Government with a more 

robust selection of small businesses for 

its set-aside requirements. Another 

commenter expressed concerns about 

the potential consequences of not 

adopting the SBA’s proposal and 

pointed to the current distribution of 

Federal contracts in this industry, 

which is dominated by a few large firms 

as a symptom that could be exacerbated 

by a failure to adopt the proposed 

increase to the size standard. Another 

commenter supported the SBA’s 

proposal because it would allow more 

small businesses to win prime 

contracting opportunities. The 

commenter explained that allowing 

small businesses to grow to the size that 

can support agency needs as prime 

contractors will allow agencies to set 

aside more contracts for small 

businesses. 

SBA’s Response 

SBA agrees with commenters that the 

proposed increase to the size standard 

for NAICS 541330 will benefit both 

small businesses and the Federal 

Government. With an expanded pool of 

small businesses, the Federal 

Government will have access to more 

qualified small businesses to choose 

from, and as a result, will likely set 

aside more contracts for small 

businesses. SBA also agrees with 

commenters that robust competition 

within the industry will lead to more 

set-aside opportunities and that 

businesses will have a longer runway to 

gain experience to be able to better 

compete with large firms upon their 

graduation from the size standard. The 

proposed change would also enable 

some small businesses that have 

exceeded the current size standard to 

regain their small business status and 

qualify for SBA’s contracting and 

financial assistance programs. SBA has 

quantified these impacts in the 

Regulatory Impact Analysis section of 

this final rule. 

(4) The proposed increase accurately 

reflects the changes to industry 

structure that have occurred since the 

last comprehensive review of the size 

standard. 

SBA received six comments in 

support of the proposed size standard 

expressing that the proposed higher size 

threshold better reflects the existing 

industry and current market conditions. 

Specifically, commenters argued that 

increasing the size standard for NAICS 

541330 to $22.5 million is reflective of 

increasing the number and size of large 

firms since the last review of that size 

standard which likely led to increases in 

the values of industry factors, such as 

the weighted average firm size and the 

Gini coefficient used to calculate the 

size standard. Other commenters 

expressed support for a higher size 

standard for this industry based on the 

Federal contracting data showing 

increasing average contract sizes. 

Finally, one commenter stated that they 

supported the SBA’s proposed increase 

based on the resiliency of the industry 

during the COVID–19 induced 

economic recession. This commenter 

further explained that they support the 

proposed increase to the size standards 

for all industries that have not been 

adversely impacted by the COVID–19 

pandemic because small firms in these 

industries need to achieve a certain size 

and level of experience to earn set-aside 

opportunities. The commenter reasoned 

that an increase in the size standard is 

warranted in this industry to support 

small business growth and promote 

competition. 

SBA’s Response 

SBA agrees with commenters that the 

SBA’s proposed increase to the size 

standard for NAICS 541330 better 

reflects the current economic 

characteristics of the firms within this 

industry. SBA also agrees with 

commenters that industry consolidation 

and the growth of large firms has the 

potential to increase the calculated 

factors for weighted average receipts 

and the Gini coefficient. As detailed in 

Table 4 of the November 2020 proposed 

rule, the size standards supported by the 

factors for this industry already reflect 

an industry whose receipts distribution 

is significantly concentrated at the top. 

As such, SBA believes that the proposed 

size standard for this industry 

accurately reflects the industry structure 

and economic characteristics of its 

participant firms. SBA also agrees with 

the comment regarding the resiliency of 

engineering services firms during the 

COVID–19 related economic crisis. Data 

from FPDS–NG shows that there was an 

increase in dollars obligated to small 

businesses in this industry during fiscal 

years 2018–2020, which suggests that 

small firms have continued to do well 

in the Federal marketplace while 

providing valuable services to the 

Federal Government during the COVID– 

19 pandemic. Table 3, Dollars Obligated 

to Small Businesses in NAICS 541330, 

shows the dollars obligated to small 

businesses under NAICS 541330 and the 

annual growth rate during fiscal years 

2018–2020. SBA believes that adopting 

the proposed $22.5 million size 

standard will support the resiliency of 

small businesses in this industry by 

likely increasing the number of set-aside 

opportunities available and better 

directing SBA’s resources to their 

intended beneficiaries. 

TABLE 3—DOLLARS OBLIGATED TO SMALL BUSINESSES IN NAICS 541330 

Fiscal year 

Dollars 

obligated to 

small businesses 

($ million) 

Annual 

growth rate 

(%) 

2018 ............................................................................................................................................................. 8,460 


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TABLE 3—DOLLARS OBLIGATED TO SMALL BUSINESSES IN NAICS 541330—Continued 

Fiscal year 

Dollars 

obligated to 

small businesses 

($ million) 

Annual 

growth rate 

(%) 

2019 ............................................................................................................................................................. 9,417 11.3 

2020 ............................................................................................................................................................. 9,923 5.4 

Comments Opposing the Proposed $22.5 

Million Size Standard 

Commenters opposed to the SBA’s 

proposal included individuals, 

engineering firms, and trade 

associations. Of the 45 comments 

received regarding the SBA’s proposal 

to increase the size standard for NAICS 

541330 from $16.5 million to $22.5 

million, SBA received six comments 

that were totally opposed to the 

proposed size standard increase. These 

commenters argued that increasing the 

size standard beyond the current level 

would harm smaller small firms. 

Of the 45 comments regarding the 

SBA’s proposed size standard increase 

for NAICS 541330, six comments were 

opposed to any increase to the size 

standard. Of these six comments, four 

supported the current $16.5 million size 

standard and one recommended that the 

size standard be lowered instead of 

increasing it. These commenters 

expressed concerns that SBA’s proposed 

size standard would harm truly small 

firms by increasing the number of larger 

small firms competing for set aside 

opportunities. One engineering firm 

with average annual revenues below $6 

million expressed that competing 

against firms with $20 million in 

average annual receipts and an 

employee count of 100 or more people 

would be difficult for smaller small 

firms because larger firms have 

experience and resources that smaller 

small firms do not have. The commenter 

urged SBA to maintain the current size 

standard or consider a micro entity 

category for this NAICS code. Another 

commenter with 40 employees 

expressed that although they may be 

considered a larger small engineering 

firm, they support maintaining the size 

threshold at the current level to ensure 

that smaller small firms continue to 

benefit from SBA’s contracting 

programs. Commenters to this issue did 

not provide any data in support of their 

position. 

SBA’s Response 

SBA’s proposed increase to the size 

standard for Engineering Services may 

result in some redistributions of Federal 

contracts between the newly qualified 

small businesses and large businesses 

and between the newly qualified small 

businesses and small businesses under 

the current size standard. However, it 

would have no impact on the overall 

economic activity because total Federal 

contract dollars available for businesses 

to compete for will not change with 

changes to size standards. Although 

SBA cannot quantify with certainty the 

actual outcome of the gains and losses 

from the redistribution of contracts 

among different groups of businesses, it 

can identify several probable impacts in 

qualitative terms. With the availability 

of a larger pool of small businesses 

under the proposed increases to the size 

standard, some unrestricted Federal 

contracts that would otherwise be 

awarded to large businesses may be set 

aside for small businesses. As a result, 

large businesses may lose some Federal 

contracting opportunities. Similarly, 

some small businesses under the current 

size standards may obtain fewer setaside contracts due to the increased 

competition from larger businesses 

qualifying as small under the proposed 

increase to the size standard. However, 

this impact may be offset by a greater 

number of procurements being set aside 

for all small businesses. SBA analyzed 

data from the 2012 Economic Census 

special tabulation and determined that 

SBA’s proposed size standard would 

increase the total number of small firms 

in the industry by only 344 firms, or 

0.8% of the 44,074 firms that are 

currently small. Thus, SBA believes that 

an increase in firms of the magnitude 

described above will not significantly 

disadvantage currently small firms. 

Moreover, SBA analyzed internal data 

on 7(a) and 504 loans for fiscal years 

2018–2020 and determined that 95.2% 

of loans were issued to firms one-sixth 

the size of the employee equivalent of 

the proposed size standard for this 

industry, indicating that the majority of 

firms receiving SBA’s financial 

assistance are much smaller than the 

current and proposed size standard. 

Thus, SBA does not anticipate that 

increasing the size standard to the 

proposed $22.5 million level will 

impact the ability of small firms to 

participate in SBA’s financial assistance 

programs. 

Comments Recommending a Higher 

$39.5 Million Size Standard 

Of the 45 comments relating to the 

SBA’s proposed increase of the 

Engineering Services size standard to 

$22.5 million, 12 commenters 

maintained that SBA’ proposal to 

increase the size standard is a step in 

the right direction, but the proposed 

increase is not enough to address the 

challenges small businesses currently 

face in the Federal market. They 

petitioned SBA to raise the size 

standard for NAICS 541330 further to at 

least $39.5 million, to match the current 

and proposed $39.5 million size 

standard for NAICS 236220 

(Commercial and Institutional Building 

Construction). Support for a higher size 

standard than what SBA proposed 

focused on four main arguments: (1) The 

Brooks Act qualifies as a unique 

characteristic in NAICS 541330 and 

should be considered for adjusting the 

size standard to a higher level of $39.5 

million; (2) The concentration of 

Federal contracting dollars among the 

largest firms makes it difficult for small 

firms to compete upon graduating from 

the current size standard; (3) Increasing 

use of limited competition acquisition 

vehicles, such as Indefinite Delivery, 

Indefinite Quantity (IDIQ) contracts, 

Governmentwide Acquisition Contracts 

(GWAC), and Best-In-Class (BIC) 

contract vehicles favors large 

businesses; and (4) Increasing the size 

standard significantly will allow the 

Government to set aside more 

requirements for small businesses. SBA 

discusses the concerns raised by these 

commenters and its responses, below. 

(1) The Brooks Act qualifies as a 

unique characteristic in the 541330 

industry and should be considered for 

adjusting the size standard to a higher 

value of at least $39.5 million. 

Twelve commenters in favor of a 

higher size standard for NAICS 541330 

recommended that SBA raise the size 

standard to $39.5 million based on the 

unique characteristic in the industry 

created by the Brooks Act. The 

commenters maintained that the Brooks 

Act establishes a qualifications-based 

selection (QBS) process, in which 

architectural and engineering (A&E) 

services contracts are negotiated solely 


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on the basis of demonstrated 

competence and qualification for the 

type of professional services required at 

a fair and reasonable price. One 

comment submitted on behalf of a group 

of 12 engineering firms expressed that to 

be competitive in an environment where 

the Brooks Act is predominantly used in 

the acquisition process, the A&E firms 

must compete solely based on 

capabilities, which can be directly tied 

to the number of professionals a firm 

has and past projects that the firm has 

successfully completed. Thus, the 

commenters recommended that SBA 

should consider the Brooks Act as an 

additional factor for adjusting the size 

standard to a higher value to help small 

firms overcome the bias towards larger 

firms for contracts subject to the Brooks 

Act requirement. Along with their 

comments, the group provided a white 

paper which included the data showing 

the dollars obligated to NAICS 541330 

relative to other industries, total 

contract awards by vendor, market 

concentration of prime contracts, and 

the distribution of contracts by types 

and vehicles. Another engineering firm, 

which expressed agreement with the 

comments submitted by the group of 12 

engineering firms expressed that a size 

standard of $39.5 million is necessary 

and proper to establish an environment 

where small businesses can compete, 

grow, and successfully transition to 

other-than-small status. 

SBA’s Response 

SBA appreciates the informed 

comments submitted by commenters to 

this issue. SBA has reviewed the data 

provided by the commenters and 

determined that the data largely agrees 

with data that SBA evaluated in 

determining the proposed size standard 

for this industry. However, although the 

data provided to SBA are sufficient to 

demonstrate the concentration of 

Federal contracting dollars among a 

handful of large firms, the data does not 

demonstrate that SBA’s current or 

proposed size standard for NAICS 

541330 would have an adverse impact 

on the ability of small firms to compete 

for Federal contracting opportunities in 

that industry. Moreover, SBA does not 

agree with commenters’ statements that 

the Brooks Act disadvantages small 

firms. They did not provide any 

empirical data supporting their 

arguments that the QBS process under 

the Brooks Act favors large businesses to 

the detriment of small businesses under 

the current or proposed size standard. 

SBA believes that the Brooks Act may 

have the opposite effect, increasing 

opportunities for smaller firms by 

removing the emphasis on low price. 

This leads to increased opportunities for 

smaller firms that may be able to better 

compete with larger firms on the 

grounds of their niche market expertise, 

knowledge of local rules and 

regulations, and greater involvement of 

experienced and specialized staff. SBA’s 

analysis of the Federal contracting factor 

for this industry supports this 

conclusion. 

As detailed in Table 4 of the 

November 2020 proposed rule, the size 

standards associated with the weighted 

average firm size and the Gini 

coefficient factors already reflect an 

industry in which receipts are 

significantly concentrated at the top of 

the size distribution. However, 

regarding the Federal contracting factor, 

SBA found that, under the current $16.5 

million size standard, the small 

business share of Federal contracting 

dollars in this industry was greater than 

the small business share of total 

industry receipts. Thus, based on its 

methodology for evaluating size 

standards and the latest data, SBA 

determines that the current size 

standard of $16.5 million is appropriate 

with respect to the Federal contracting 

factor. SBA believes that increasing the 

size standard to the proposed $22.5 

million level based on the analysis of all 

factors may increase the number of setasides in this industry and further 

benefit the small firms that are already 

well-represented in the Federal 

contracting market at the current size 

standard. As such, SBA does not believe 

that it would be appropriate to increase 

the size standard for this industry based 

solely on the requirements of the Brooks 

Act because the latest data does not 

show that small firms are significantly 

disadvantaged as a result of the 

requirements of this law. 

(2) The concentration of Federal 

contracting dollars among the largest 

firms makes it difficult for small firms 

to compete upon graduating from the 

current size standard. 

At least eight commenters 

recommended a higher $39.5 million 

size standard for NAICS 541330 based 

on the belief that both the current and 

proposed size standard levels would 

disadvantage graduating small firms 

(larger small firms) that would be 

competing with much larger firms under 

full and open competition. The 

commenters added that a firm 

graduating from the current or proposed 

size standard cannot be competitive in 

the full and open marketplace. They 

maintained that almost 50% of total 

contract dollars in NAICS 541330 in 

DOD and more than 70% of the same at 

NASA and DOT went to the top 10 

businesses. The commenters argued that 

the Brooks Act has caused this industry 

to be dominated by 10 large firms, 

making it nearly impossible for small 

businesses to compete for Federal 

opportunities upon graduation from the 

size standard. The comments 

maintained that that a larger increase to 

the size standard is warranted to ensure 

that small firms are able to gain the 

experience and capabilities necessary to 

successfully compete with larger firms 

upon graduation from small business 

status. 

SBA’s Response 

In response to the comments, SBA 

analyzed the data from FPDS–NG for 

fiscal years 2018–2020 to determine the 

range of Federal contracting 

opportunities available to firms above 

the current or proposed size standard. 

SBA’s analysis showed that 18.6% of 

the total dollars obligated to NAICS 

541330 went to firms below the 

proposed $22.5 million size standard 

and 25.2% of the total dollars obligated 

to that industry went to firms below the 

commenters’ suggested size standard of 

$39.5 million. Moreover, the data shows 

that there is not a disproportionate share 

of Federal contracting opportunities 

available to firms that have exceeded 

the size standard as compared to their 

share of total industry receipts. For 

example, based on the FPDS–NG data 

for fiscal years 2018–2020, SBA 

determined that 9.5% of the average 

annual total dollars obligated to NAICS 

541330 went to firms above the current 

$16.5 million size standard but below 

the $39.5 million size standard 

suggested by commenters. Using the 

special tabulation of the 2012 Economic 

Census, SBA estimated that 7.9% of 

total industry receipts in NAICS 541330 

was accounted for by firms above the 

current $16.5 million size standard but 

below the $39.5 million size standard 

suggested by commenters. Thus, based 

on SBA’s methodology for evaluating a 

size standard for the Federal contracting 

factor, SBA finds that there are adequate 

Federal contracting opportunities for 

firms that have recently graduated from 

the size standard because the share of 

Federal contracting dollars to firms in 

that size range is proportionate to their 

respective share of industry receipts. 

Table 3, Distribution of Contracting 

Dollars and Industry Receipts by Firm 

Size in NAICS 541330, summarizes 

these results. 


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TABLE 3—DISTRIBUTION OF CONTRACTING DOLLARS AND INDUSTRY RECEIPTS BY FIRM SIZE IN NAICS 541330 

Firm size in receipts 

($ million) 

Average total 

dollars 

obligated 

(FPDS–NG) 

($ million) 

Share of total 

dollars 

obligated 

(%) 

Industry 

receipts (2012 

economic 

census) 

($ million) 

Share of total 

industry 

receipts 

(%) 

<= $16.5 ........................................................................................................... 5,527 15.70 50,570 24.30 

>$16.5 and <= $22.5 ....................................................................................... 1,022 2.90 5,886 2.80

>$22.5 and <= $39.5 ....................................................................................... 2,334 6.60 10,584 5.10 

>$39.5 .............................................................................................................. 26,377 74.8 141,083 67.8 

Total .......................................................................................................... 35,260 100.0 208,124 100.0 

Based on the above results, SBA does 

not agree with commenters that a 

deviation from the calculated size 

standard is necessary to ensure that 

small firms are able to compete once 

they graduate from the size standard. 

Moreover, SBA believes that increasing 

the size standard to $22.5 million will 

extend the runway for small firms to 

grow and increase their ability to 

compete for larger contracts while also 

maintaining a fair and competitive 

playing field for the 96.8% of firms in 

this industry that are small at the 

proposed $22.5 million size standard. 

(3) Increasing use of limited 

competition acquisition vehicles, such 

as Indefinite Delivery, Indefinite 

Quantity (IDIQ) contracts, 

Governmentwide Acquisition Contracts 

(GWAC), and Best-In-Class (BIC) 

contract vehicles favors large 

businesses. 

Almost all in the group of 

commenters recommending a higher 

$39.5 million size standard argued that 

the increased use of limited competition 

vehicles, such as Indefinite Delivery, 

Indefinite Quantity (IDIQ) contracts, 

Governmentwide Acquisition Contracts 

(GWACs), and Best-in-Class (BIC) 

contracts, by Federal agencies increases 

the number of opportunities for large 

Federal contractors to the detriment of 

small businesses. The commenters 

maintained that over 70% of the total 

spend in NAICS 541330 goes through 

limited competition vehicles, such as 

IDIQ, GWAC, and BIC vehicles. The 

commenter added that small businesses 

graduating from the current size 

standard cannot be competitive in full 

and open IDIQ contracts and that the 

proposed $6 million increase is not 

adequate to appropriately alleviate this 

issue, which is why a more significant 

size standard increase is necessary to 

allow firms to be successful in capturing 

IDIQ contracts. 

SBA’s Response 

Consolidated buying strategies—such 

as relying on GWACs and BIC 

contracts—favor incumbent and 

established government vendors, but 

SBA does not believe that those 

strategies unequivocally favor large 

businesses over small businesses. 

Authority from the Small Business Jobs 

Act of 2010 permits agencies to issue 

set-aside orders off of IDIQ contracts, 

and some court decisions have applied 

mandatory small-business preferences 

to those vehicles. Additionally, certain 

GWACs are available exclusively to 

small businesses. This includes vehicles 

that are either entirely set aside for SBA 

socioeconomic program participants or 

feature pools exclusively for SBAcertified firms. That said, when agencies 

consider these limited-competition 

vehicles, they must continue to 

prioritize small-business contracting 

ahead of consolidating their contracts. 

In its recent Memorandum No. M–22–03 

on ‘‘Advancing Equity in Federal 

Procurement’’, the Office of 

Management and Budget (OMB) 

emphasized that agencies must not use 

BIC contracts where doing so might 

threaten the agency’s small business 

goals or the growth of the smallbusiness supplier base. OMB also 

reformed the Category Management 

program—of which GWACs all are a 

part of—to designate all socioeconomic 

small businesses as Tier 2. SBA believes 

that these measures may ameliorate 

some the challenges small businesses in 

NAICS 541330 face from increased use 

of IDIQs, GWACs and BICs. 

(4) Increasing size standard will 

significantly allow the Government to 

set aside more requirements for small 

businesses. 

The commenters stated that 

increasing the size standard to the $39.5 

million level will allow a significant 

number of businesses to qualify as 

small, thereby expanding a pool of 

qualified small businesses, which 

would, in turn, encourage the 

Government to set aside more contracts 

for small businesses. This will, as the 

commenters added, spur more 

competition amongst small businesses, 

which leads to the improvement in the 

quality of services being delivered to the 

Government buyer. The commenters 

asserted that their proposed significant 

increase to the size standard would not 

negatively impact small businesses 

under the current size standard when 

competing for Federal opportunities. 

SBA’s Response 

SBA agrees with the commenters’ 

position that increasing the size 

standard to $39.5 million would allow 

significant number of businesses above 

the current or SBA’s proposed size 

standard to qualify as small and become 

eligible for Federal opportunities 

intended for small businesses. However, 

SBA is concerned that, by allowing 

significantly larger and more qualified 

and resourced companies above the 

current or proposed size standard to 

qualify as small, the commenters’ 

proposed $39.5 million size standard 

(which is almost 140% increase from 

the current $16.5 million and more than 

75% increase from the SBA’s proposed 

$22.5 million size standard) would 

likely negatively impact smaller small 

businesses when competing for Federal 

opportunities. The commenter argued 

that increasing the size standard will 

not hurt small businesses below the 

current size standard, but they did not 

provide any data or analysis supporting 

their argument. 

The commenters recommended to 

increase the size standard for NAICS 

541330 to not less than $39.5 million, 

but they did not provide any specific 

industry data or analysis justifying why 

the size standard should be increased to 

that level, except for suggesting to make 

it at par with the size standard for 

NAICS 236220 (Commercial and 

Institutional Building Construction). 

The results of the SBA’s analysis of the 

industry and Federal contracting factors, 

shown in Table 4 of the November 2020 

proposed rule, supported a size 

standard of $25.5 million for NAICS 

236220, a decrease from the current 

$39.5 million size standard. However, in 

accordance with its policy of not 

lowering any size standard in the 

current environment due to the COVID– 


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19 pandemic, SBA proposed to retain 

the current $39.5 million for NAICS 

236220. 

Based on the 2012 Economic Census, 

96.8% of all firms in NAICS 541330 

would qualify as small under the SBA’s 

proposed $22.5 million size standard, 

which would provide an adequate and 

robust pool of qualified and competitive 

small businesses for the Government to 

choose from for their se-aside 

requirements. Increasing the size 

standard to the commenters’ proposed 

$39.5 million level would add another 

400–500 firms as small in the Federal 

marketplace, thereby increasing 

competition for SBA’s programs and 

resources which may hurt smaller small 

businesses under the current size 

standard. For these reasons, SBA is not 

adopting the $39.5 million as the size 

standard for NAICS 541330. 

Comments Raising Other Issues 

SBA received several comments 

raising other issues on its proposal to 

increase the size standard for NAICS 

651330 from $16.5 million to $22.5 

million. These commenters 

recommended that SBA establish a 

common size standard between 

Engineering Services and other related 

industries, offered recommendations 

and submitted questions regarding 

SBA’s analysis of the engineering size 

standard. SBA discusses these 

comments and its responses below. 

(1) SBA should establish a common 

size standard between Engineering 

Services and other related industries. 

Nine commenters to the proposed rule 

suggested that SBA establish a common 

size standard between Engineering 

Services and other related industries, 

namely NAICS 541310 (Architectural 

Services) and NAICS 236220 

(Commercial and Institutional Building 

Construction). Similarly, SBA received a 

comment from a group of 12 engineering 

firms, requesting that SBA increase the 

size standard for NAICS 541330 to at 

least $39.5 million to match the size 

standard for NAICS 236220. Another 

commenter, an architecture and 

engineering firm, recommended 

aligning the size standard for 

Engineering Services with the size 

standard for Architectural Services, 

arguing that these two NAICS codes are 

intertwined and in effect one and the 

same industry. This commenter 

explained that contracting officers may 

sometimes misclassify contracts due to 

the similarities and interdependence 

between the two NAICS codes. Thus, a 

common size standard would help to 

eliminate any disparities that may result 

from an incorrect selection of the NAICS 

code. The commenter also pointed to 

the difference in the amounts of dollars 

obligated between NAICS 541310 and 

NAICS 541330 as evidence of the 

incorrect classification of A&E contracts, 

arguing that the more widespread use of 

NAICS 541330 with a larger size 

standard was responsible for that 

difference. 

SBA’s Response 

SBA does not agree with commenters 

that the size standard for engineering 

services should be aligned with the size 

standards for industries that seem to 

perform related activities. Although the 

firms in engineering and architectural 

services industries may perform codependent and related business 

activities, SBA’s analysis of these 

industries, as detailed in Table 4 of the 

November 20 proposed rule, 

demonstrates that their industry 

structures and the economic 

characteristics of the respective firms 

are markedly different, thereby 

justifying a unique size standard for 

each industry. For example, engineering 

firms are significantly larger than 

architectural firms based on simple and 

weighted average firm size (engineering 

firms are roughly three times larger 

based on the simple average firm size 

and 25 times larger based on the 

weighted average firm size). Engineering 

firms have three times as many average 

assets and a more top-heavy industry 

concentration in terms of both receipts 

and Federal contract dollars. Likewise, 

the Commercial and Institutional 

Building Construction industry is also 

significantly different from Engineering 

Services industry, particularly with 

respect to weighted average firm size 

and industry concentration of Federal 

contract dollars. Thus, SBA believes 

that creating a common size standard 

between Engineering and Architectural 

Services and between Engineering 

Services and Commercial and 

Institutional Building Construction 

would be inconsistent with differences 

in industry factors used in evaluating 

the size standards in those industries. 

It is ultimately the responsibility of 

the contracting officer to designate the 

proper NAICS code based on the 

principal purpose of the product or 

service being acquired (13 CFR 

121.402(b)). SBA does not believe that 

the size standard is an appropriate tool 

to address the issue of an incorrect 

NAICS code selection in a solicitation. 

SBA has established a process for 

interested parties to appeal with SBA’s 

Office of Hearings and Appeal (OHA) a 

contracting officer’s NAICS code 

designation in its regulations at 13 CFR 

121.1101. SBA encourages impacted 

firms to use this process when they 

believe that a contracting officer has 

categorized a solicitation under an 

improper NAICS code. 

As part of the first five-year review of 

size standards under the 2010 Jobs Act, 

SBA proposed a common $19 million 

size standard for all industries within 

NAICS Industry Group 5413 

(Architectural, Engineering, and Related 

Services), including NAICS 541310 

(Architectural Services) and NAICS 

541330 (Engineering Services) (76 FR 

14323 March 6, 2011)). A vast majority 

of comments concerning the proposed 

size standard for NAICS 541310 

opposed the establishment of the 

common size standard between 

Architectural and Engineering Services 

industries on the grounds that 

architectural firms are, on average, 

much smaller than their engineering 

counterparts and that the common size 

standard would hurt the smaller small 

architectural firms in competing for 

Federal contracting opportunities. A 

detailed discussion of these comments 

can be found in the SBA’s final rule (77 

FR 7489 (February 10, 2012)). 

For the above reasons, SBA is 

maintaining separate size standards for 

NAICS 541310, 541330, and 236220, as 

proposed. Specifically, in this final rule, 

SBA is adopting the proposed $11 

million size standard for NAICS 541310 

(Architectural Services) and the 

proposed $22.5 million size standard for 

NAICS 541330 (Engineering Services. 

Similarly, in a separate rulemaking (85 

FR 62372 (October 2, 2020)), SBA 

proposed to retain the current $39.5 

million size standard for NAICS 236220, 

which SBA adopted in the 

corresponding final rule (RIN 3245– 

AG90). 

(2) Recommendations and questions 

regarding SBA’s analysis of the size 

standard for NAICS 541330. 

Ten commenters raised questions or 

offered other recommendations 

regarding SBA’s analysis of size 

standard for NAICS 541330 

(Engineering Services). One engineering 

trade association representing more than 

5,500 engineering firms and 600,000+ 

engineers, surveyors, architects, and 

other specialists nationwide 

recommended that SBA create 

additional size standards (in addition to 

the existing four) under NAICS 541330 

to account for the wide spectrum of 

engineering disciplines (such as civil, 

electrical, mechanical, environmental, 

structural, etc.) and services offered by 

this industry. The association asserted 

that it is critical to understand the 

differences between engineering 

services related to physical 

infrastructure projects (such as 

buildings, wells, dams, mines, canals, 


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and roads, etc.) and other engineering 

activities related to the design, 

development, and utilization of 

machines, materials, instruments, 

processes, and systems. The association 

further explained that in order to 

establish a meaningful size standard for 

the Brooks Act covered engineering 

industry involved with physical 

infrastructure projects for Government 

and public works entities, the sector’s 

data needs to be separated from the 

manufacturing and management firms 

and separate size standards be 

developed. It expressed concerns over 

the use of combined data gathered from 

disparate sectors of the engineering 

services industries and recommended 

that SBA obtain sufficient information 

from the Department of Commerce to 

overcome the issues it raised and 

propose appropriate size standards for 

the Brooks Act covered Engineering 

Services segment and the rest of the 

industry. 

Another commenter questioned why 

SBA proposed to increase the size 

standard for the general NAICS 541330 

industry but decrease the size standard 

for its Military and Aerospace 

Equipment and Military Weapons 

exception. The commenter inquired 

whether SBA’s analysis showed similar 

pressures on the parameters that impact 

size standards for the general 

engineering industry and the exception, 

and it suggested that the pressures are 

generally the same between the 

industries. The commenter requested 

that SBA provide a more detailed 

explanation of how the proposed size 

standards for these industries were 

determined. 

Finally, eight commenters suggested 

that SBA increase the size standard for 

this industry to at least $25 million 

based on SBA’s 2011 proposal to 

increase the size standard for industries 

in the NAICS Industry Group 5413 to 

$19 million (76 FR 14323 (March 16, 

2011)) and inflation since then. The 

commenters argued that adjusting the 

proposed $19 million size standard from 

2011 to present day at an annual 

inflation rate of 3% would suggest that 

the revised size standard for NAICS 

541330 should be at least $25 million. 

SBA’s Response 

In response to the comment that SBA 

should create additional size standard 

exceptions under NAICS 541330 to 

better reflect the differing characteristics 

and specializations of engineering firms, 

SBA surveyed the alternative data 

sources available from the U.S. Census 

Bureau and determined that the 

available data was not sufficient to 

conduct a size standard analysis for the 

different segments of the engineering 

industry as suggested by the commenter. 

As explained in the proposed rule, 

SBA’s primary source of industry data 

for evaluating industry characteristics 

and developing size standards is a 

special tabulation of the latest Economic 

Census from the Census Bureau. The 

data from the special tabulations are 

limited to the 6-digit NAICS industry 

level, and hence, do not provide 

separate data to evaluate a size standard 

at the subindustry level. SBA was not 

able to find other sources of data 

detailed enough to accurately capture 

the economic characteristics and 

industry composition of engineering 

firms. To account for different services 

and specializations that engineering 

firms provide, SBA has already 

established three subindustries (or 

exceptions) under NAICS 541330, in 

addition to the size standard for the 

general engineering industry. 

The Economic Census is the most 

comprehensive industry data source 

that provides information across all 

industries under its scope, using 

uniform definitions and measures that 

allow for consistent industry 

comparisons at the same moment in 

time. Because the firm size distribution 

does not change drastically from one 

Economic Census to the next, the data 

retains its usefulness even if it is not 

produced in a recent year. SBA recently 

received a preliminary tabulation based 

on 2017 Economic Census. Comparing 

with the newer data, SBA found that the 

industry structure for NAICS 541330 

has not drastically changed from the 

2012 data. For example, SBA found that 

based on the 2012 Economic Census, 

3% of firms earned receipts more than 

$25 million, accounting for 71.8% of 

total industry receipts. Based on the 

2017 preliminary tabulation, 3.5% of 

firms earned receipts more than $25 

million, accounting for 70.8% of total 

industry receipts. 

In response to the comment 

questioning the SBA’s rationale for 

increasing the size standard for the 

general NAICS 541330 industry but 

decreasing the size standard for one of 

the exceptions to that NAICS code, 

namely the Military and Aerospace 

Equipment and Military Weapons 

exception, SBA would like to clarify 

that while the calculated size standard 

for this exception was $39 million, a 

decrease from the current size standard, 

SBA proposed to retain the current 

$41.5 million size standard. In view of 

the effects of the COVID–19 pandemic 

on small businesses and Federal 

Government efforts to provide relief to 

small businesses and the overall 

economy, SBA proposed to maintain the 

current size standards for all industries 

where the analytical results suggested 

decreases and to increase the size 

standards for all industries where 

analytical results suggested increases. 

Although firms in the general NAICS 

541330 industry and those in the 

exceptions may perform related 

business activities, SBA’s analyses of 

the industry and exception, as detailed 

in Table 4 of the November 2020 

proposed rule, demonstrates that their 

industry structures and the economic 

characteristics of the firms are markedly 

different. Regarding the exception 

specifically, the calculated size standard 

was lower than the current and 

proposed size standard due to a lower 

size standard supported by the four-firm 

ratio which decreased the average of all 

size standards supported by all factors 

for this industry exception from $41.5 

million to $39 million. Similarly, for the 

general NAICS 541330, the four-firm 

ratio supported a size standard of only 

$12 million, the smallest of all size 

standards supported by any factor for 

this industry. As such, SBA’s analysis 

shows that some of the same pressures 

do exist for the portion of work covered 

under the exception as in the general 

industry. 

In response to comments that the size 

standard for this industry should be 

raised to at least $25 million based on 

inflation and SBA’s 2011 proposal to 

increase the size standard to $19 

million, SBA reviewed the recent 

history of changes to size standards for 

NAICS 541330 and found that the size 

standard for this industry has been 

adjusted appropriately since 2011. As 

stated by the commenters, in a March 

2011 proposed rule, SBA proposed to 

establish a $19 million size standard for 

this industry (76 FR 14323 (March 16, 

2011)). However, in a final rule issued 

in February 2012, SBA adopted a lower 

size standard of $14 million in response 

to public comments (77 FR 7489 

(February 10, 2012)). Since proposing 

the $19 million size standard in 2011, 

SBA has issued two inflation 

adjustments to its monetary-based size 

standards, of which both applied to the 

size standard for this industry as well. 

Had SBA adopted the $19 million size 

standard in 2012, the first inflation 

adjustment, effective in July 2014 and 

adopted in a final rule in 2016, would 

have increased the size standard to 

$20.5 million (81 FR 3949 (January 25, 

2016)). The second inflation adjustment 

effective in August 2019, would have 

further increased the $20.5 million size 

standard to $22 million (84 FR 34261 

(July 18, 2019)). As such, SBA disagrees 

with commenters that the proposed size 


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standard found in the March 2011 

proposed rule would justify a $25 

million size standard today based on 

inflation since then. SBA also disagrees 

with the merits of using the $19 million 

size standard as a basis for inflation 

adjustment since SBA did not adopt the 

$19 million size standard in its February 

2012 final rule. 

SBA also submitted a comment 

detailing a meeting that occurred 

between SBA and an engineering trade 

association regarding SBA’s size 

standard methodology and its 

calculations involved in deriving the 

size standard for engineering services. 

The meeting occurred virtually on 

December 17, 2020 and was attended by 

the association’s Size Standard Working 

Group, a senior economist from SBA’s 

Office of Size Standards, and an 

attorney from SBA’s Office of General 

Counsel. SBA representatives listened to 

the concerns of the association and 

addressed four questions the 

organization forwarded to SBA prior to 

the meeting on the topic of how the 

calculations of the proposed size 

standard for the Engineering Services 

industry were done. The association 

asked SBA to provide details on the 

weighting of primary factors under the 

SBA’s size standard methodology, the 

impact of the COVID–19 pandemic on 

the review of size standards, and the 

status of the 2017 Economic Census 

special tabulation. Additionally, SBA 

representatives listened to other 

questions and concerns related to the 

current proposed rule, especially 

concerns related to the skewing of 

calculations due to possible 

misclassifications of large firms under 

NAICS 541330. In response to these 

questions, SBA explained the formulas 

used to calculate the proposed size 

standard, including the weighting of 

factors, using NAICS 541330 as an 

example. SBA also explained that in 

response to the economic impacts of the 

COVID–19 pandemic, SBA did not make 

adjustments to the size standard 

methodology itself, however, in the 

proposed rule, SBA proposed to 

maintain current size standards in all 

industries for which the analysis 

supported a decrease to size standards 

to ensure that small businesses would 

not lose access to SBA assistance during 

the pandemic. Regarding the status of 

the special tabulation of the 2017 

Economic Census which SBA uses to 

evaluate size standards, SBA explained 

that the data were not yet available and 

thus, SBA is still using the 2012 

Economic Census tabulation for the 

evaluation of size standards. Detailed 

meeting minutes, including SBA’s 

responses to the questions posed by the 

association, can be found as one of the 

comments to the proposed rule at 

www.regulations.gov. 

Summary of the Discussion of 

Comments to NAICS 541330 

Based on its analysis of industry data 

and the comments received, SBA is 

adopting the size standard of $22.5 

million for NAICS 541330, as proposed. 

SBA believes that the $22.5 million is 

the appropriate size standard for this 

industry and will further benefit the 

small firms that are already well 

represented in the Federal marketplace 

at the current size standard by 

increasing the potential for more setaside opportunities and expanding the 

runway to grow and become more 

competitive under full and open 

competition upon exceeding the size 

standard. A higher size standard will 

also provide the Government with 

access to better services through robust 

competition, while fostering growth of 

small businesses in this industry. 

Comments on Proposed Changes to 

NAICS 541611—Administrative 

Management and General Management 

Consulting Services & NAICS 541990— 

All Other Professional, Scientific and 

Technical Services 

SBA received two nearly identical 

comments to its proposal to increase the 

size standards for NAICS 541611 

(Administrative Management and 

General Management Consulting 

Services) and NAICS 541990 (All Other 

Professional, Scientific and Technical 

Services) from $16.5 million to $21.5 

million and $17 million in average 

annual receipts, respectively. One of the 

comments was submitted on behalf of 

12 organizations and the other comment 

was submitted on behalf of two 

organizations. 

The commenters maintained that the 

proposed increases to size standards for 

these NAICS codes are not adequate. 

They recommended that the size 

standards for both industries should be 

increased to $27.5 million, which will 

allow small businesses in those 

industries to successfully graduate from 

the small business programs. They 

stated that firms graduating at the 

current size standards do not have the 

financial resources and other 

capabilities to successfully compete 

against the most dominant firms. The 

commenters explained that Federal 

spending has trended towards 

consolidation of procurements, with 

agencies embracing GWACs and BIC 

vehicles, a policy that favors large 

businesses to the detriment of small 

businesses. Mid-sized or newly 

graduated firms are not, and cannot be, 

competitive against the large firms when 

competing for GWACs or BICs or in the 

full and open marketplace. In order to 

be competitive with the largest firms in 

the full and open marketplace and on 

GWACs and BICs, as the comments 

explained, firms need to have 

significant financial capacity and other 

resources, none of which can be 

accomplished at the current or proposed 

size standards. 

The commenters agreed with SBA’s 

proposal to increase the size standards 

for these industries but argued that SBA 

should increase both size standards by 

a larger amount to $27.5 million. The 

commenters expressed that a common 

size standard of $27.5 million in those 

industries is necessary to prevent 

‘‘NAICS shopping’’ by contracting 

officers who may sometimes take 

advantage of ambiguities in NAICS code 

definitions by choosing to classify a 

contract under a NAICS code based on 

their own individual preferences 

instead of selecting the NAICS code 

based on the primary purpose of the 

acquisition, as required by law. The 

commenters expressed that increasing 

the size standard in those industries 

would also increase the competitiveness 

of small firms participating in the 

Federal marketplace, specifically for 

opportunities with a place of 

performance Outside of the Continental 

United States (OCONUS). The 

commenters explained that small 

business set-asides in these industries 

are rare and full and open awards are 

dominated by the largest firms. The 

commenters noted that OCONUS 

contracts have continued to grow larger 

and larger, causing firms to prematurely 

outgrow their size standards, and this 

‘‘early graduation’’ does not allow the 

newly graduated firm to be competitive 

in the full and open marketplace, which 

is dominated by the largest companies. 

The commenters expressed that less 

than 10% of OCONUS work is awarded 

to small businesses. 

The commenters maintained that 

higher size standards will extend the 

runway for firms to expand their 

resources and build capacity in order to 

be more competitive upon graduation 

from the small business size status. To 

achieve Congress’ intent to maximize 

small business participation in the 

Federal marketplace, a significantly 

higher size standard of $27.5 million is 

needed for both NAICS 541611 and 

NAICS 541990, the comment added. 

Increasing the size standards 

substantially will increase the portfolio 

of firms that are available to the 

government buyer for set-aside 

opportunities. This will, the commenter 


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added, in turn increase competition, 

increase the number of set-asides, 

expand opportunities for all small firms, 

and provide better services to the 

Government. 

In support of their positions, the 

commenters provided data showing 

OCONUS contract awards classified 

under NAICS 541611 and NAICS 

541990, and the distribution of 

OCONUS contracts by type of contracts 

and agency. 

SBA Response 

Generally, SBA believes that it is not 

always appropriate to evaluate 

industries under a common size 

standard even when the business 

activities of the industries are similar or 

co-dependent. Section 3(a)(7) of the 

Small Business Act restricts the 

establishment of a common size 

standard beyond a grouping of 

industries at the four-digit NAICS level. 

Here, NAICS 541611 and NAICS 541990 

belong to different four-digit NAICS 

industry groups and thus are ineligible 

for a common size standard. 

Specifically, NAICS 541611 belongs to 

NAICS Industry Group 5416 

(Management, Scientific, and Technical 

Consulting Services) and NAICS 541990 

falls under NAICS Industry Group 5419 

(Other Professional, Scientific, and 

Technical Services). Moreover, in 

establishing or approving a common 

size standard for a grouping of 4-digit 

NAICS codes, the law requires SBA to 

make publicly available, not later than 

the date on which such size standard is 

established or approved, a justification 

demonstrating that such size standard is 

appropriate for each individual industry 

classification included in the grouping. 

Furthermore, SBA’s analysis of 

industry factors often shows important 

distinctions between industries which, 

based on SBA’s size standards 

methodology, may produce different 

size standards for industries, which 

seem to represent similar or related 

business activities. NAICS 541611 and 

NAICS 541990 exemplify this point 

well. Although there may be some 

overlap in the work performed under 

these industries, there are also 

significant differences between the two. 

For example, as shown in Table 4 of the 

November 2020 proposed rule, the 

weighted average firm size for NAICS 

541611 is $2.5 billion which supports a 

size standard of $41.5 million, whereas 

the weighted average firm size for 

NAICS 541990 is only $194 million 

which supports a size standard of $14 

million. Also, the Gini coefficient for 

NAICS 541611 is 0.824, which supports 

a size standard of $33 million, whereas 

the Gini coefficient for NAICS 541990 is 

0.784, which supports a size standard of 

$26 million. The results of these factors 

alone show that these industries have 

differing economic characteristics; thus, 

SBA believes that it is appropriate to 

evaluate the size standards for these 

industries separately. Moreover, under 

the Small Business Act (15 U.S.C. 

632(a)), SBA’s Administrator is 

responsible for establishing small 

business size definitions (or ‘‘size 

standards’’) and ensuring that such 

definitions vary from industry to 

industry to reflect differences among 

various industries. 

SBA also reviewed the System for 

Award Management (SAM) data for 

fiscal year 2020 and found that only 

about 26% of firms registered under 

NAICS 541611 as the primary industry 

were registered under NAICS 541990 as 

one of their secondary NAICS codes. 

Similarly, only 23% of firms registered 

under NAICS 541990 as the primary 

industry were registered under NAICS 

541611 as a secondary industry. 

Although these percentages demonstrate 

that there is some overlap between the 

two industries, they also show that most 

firms do not report participation in both 

industries. For the reasons detailed 

above, SBA does not agree with 

commenters that there should be a 

common size standard between these 

two industries. 

SBA’s regulations require contracting 

officers to designate the proper NAICS 

code for a solicitation based on the 

principal purpose of the product or 

service being acquired (13 CFR 

121.402(b)). As stated previously, SBA’s 

regulations in 13 CFR 121.1101 allow 

interested parties to appeal with the 

SBA’s Office of Hearings and Appeal 

(OHA) a NAICS code designation made 

by a contracting officer. SBA encourages 

the impacted firms to follow the 

procedures outlined in the SBA’s 

regulations when they believe that a 

contracting officer has categorized a 

solicitation under an improper NAICS 

code. As stated previously, the size 

standard is not an appropriate tool for 

addressing the issue of misclassifying a 

solicitation using an incorrect NAICS 

code. 

In response to the comment that SBA 

should further increase the size 

standards for both NAICS 541611 and 

NAICS 541990 to help small businesses 

compete for OCONUS contract 

opportunities, SBA reviewed the data 

provided by the commenters and 

performed its own analysis of OCONUS 

awards to these industries using the 

FPDS–NG data for fiscal years 2018– 

2020. SBA found that, for NAICS 

541611, the average annual total dollars 

obligated to firms through OCONUS 

awards are not a substantial portion of 

the overall total dollars obligated to that 

industry, with only 6% of the $11.8 

billion in average annual total dollars 

being obligated to OCONUS awards. 

Similarly, for NAICS 541990, about 22% 

of the $9.9 billion in average annual 

total dollars obligated were classified as 

OCONUS awards. SBA found that small 

businesses did not receive a large share 

of OCONUS awards under these 

industries. For example, only 22.5% of 

OCONUS awards in NAICS 541611 and 

only 9.3% of OCONUS awards in 

NAICS 541990 were awarded to small 

businesses. By comparing these results 

to the small business share of industry 

receipts for these industries, (35.8% for 

NAICS 541611 and 52.3% for NAICS 

541990), SBA determined that small 

businesses are underrepresented in this 

particular segment (OCONUS contracts) 

of the Federal contracting market within 

these industries. This 

underrepresentation is also reflected in 

the broader contracting data in NAICS 

541990, but not in NAICS 541611. For 

example, SBA calculated a Federal 

contracting factor of 4.8% for NAICS 

541611 and ¥34.1% for NAICS 541990, 

which support the size standards of 

$16.5 million and $23.0 million, 

respectively. Thus, SBA agrees with 

commenters that based solely on the 

Federal contracting factor, a higher size 

standard is supported for NAICS 541990 

compared to the SBA’s proposed $17 

million size standard. However, SBA’s 

‘‘Size Standards Methodology’’ does not 

provide for the weighting of a specific 

factor more than others. In other words, 

the methodology establishes that SBA 

will give equal weight to all five 

primary factors that are considered in 

the evaluation of an industry size 

standard. Thus, SBA believes that the 

proposed size standards for these 

industries, which are based on SBA’s 

evaluation of industry and Federal 

contracting factors, already reflect the 

commenters’ concerns regarding the 

issue of a low small business 

participation in the Federal marketplace 

in these industries. 

SBA agrees with commenters that 

increasing the size standards for these 

industries will extend the runway for 

small firms to grow and increase their 

ability to compete for larger contracts 

while also maintaining a fair and 

competitive playing field for firms that 

are small under the current size 

standards for these industries. Based on 

the 2012 Economic Census data, 98.4% 

of firms in NAICS 541611 and 98.6% of 

firms are already small under the 

current $16.5 million size standard. At 

the proposed size standards of $21.5 


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million for NAICS 541611 and $17 

million for NAICS 541990, those 

percentages increase to 98.7% and 

98.9%, respectively. SBA is concerned 

that increasing these size standards 

further may hurt smaller small 

businesses when competing for Federal 

set-aside opportunities. 

For the reasons presented above, SBA 

accepts the analytical results for these 

industries and is adopting the size 

standards of $21.5 million for NAICS 

541611 and of $17 million for NAICS 

541990, as proposed. 

Comments on Proposed Changes to 

NAICS 541810—Advertising Agencies 

SBA received one comment to its 

proposal to increase the size standard 

for NAICS 541810 (Advertising 

Agencies) from $16.5 million to $22.5 

million. The comment, submitted on 

behalf of a coalition of advertising 

agencies, expressed support for the 

proposed increase to the size standard 

for this industry, but urged SBA to 

consider adopting a higher size standard 

between $28.5 million and $30 million 

based on increased demand for digital 

marketing services, which requires 

small firms to invest more heavily in 

information technology (IT) 

infrastructure and resources. The 

commenter explained that the increase 

in digital marketing services has 

transformed the industry and forced 

small advertising agencies to provide 

services outside of their primary area of 

expertise or resource bandwidths. The 

coalition maintained that the 

advertising industry is inequitably 

concentrated, with the top 4 advertising 

agencies or their networks accounting 

for more than 50% of Federal 

Government revenue in 2019, which 

supports a higher size standard for 

NAICS 541810. It also noted that 

advertising contracts are requiring 

increasingly sophisticated IT 

infrastructure, Customer Relations 

Management (CRM)/marketing 

automation platforms, IT storage and 

hosting, and greater cybersecurity and 

compliance services, all of which add 

significant costs beyond the financial 

capabilities of many small businesses 

under the current size standard. The 

coalition of firms further recommended 

that SBA consider other data sources in 

order to obtain a fuller and more 

accurate understanding of the economic 

characteristics of the industry and 

recommended that SBA increase the 

size standard for NAICS 541810 to 

match the SBA proposed size standards 

for NAICS 541830 (Media Buying 

Agencies—$28.5 million), NAICS 

541511 (Custom Computer Programing 

Services—$30 million), and NAICS 

541512 (Computer Systems Design 

Services—$30 million) based on their 

relevance and similarities to Advertising 

Agencies. The commenter also 

contended that the 2012 Economic 

Census data, instead of the more recent 

and comprehensive industry data 

beyond the Economic Census, that SBA 

used in the proposed rule is outdated 

and does not accurately reflect the 

current structure of the advertising 

agencies industry. Finally, the coalition 

urged SBA to allow advertising agencies 

to exclude subcontractor costs from the 

calculation of receipts for the size 

standard. The coalition provided SBA 

with a copy of the executive summary 

of the Ad Age Datacenter Agency Report 

2020 and data showing total advertising 

agency revenue by year and by firm size 

for the top 250 advertising agencies in 

the U.S. 

SBA’s Response 

In response to the comment that the 

2012 Economic Census data SBA used 

to develop the proposed size standard 

for NAICS 541810 (Advertising 

Agencies) are outdated and may not 

reflect the current industry structure 

and that SBA should use alternative 

data beyond the Economic Census data, 

SBA reviewed the data provided by the 

commenter. Due to the limited sample 

size, SBA determined that the data 

provided by the commenter are not 

comprehensive enough for evaluating 

this industry’s size standard using the 

‘‘SBA’s Size Standards Methodology.’’ 

Specifically, according to the Economic 

Census, there are more than 12,000 

firms operating in the U.S. in NAICS 

541810, as compared to about 400 firms 

in comment’s Exhibit A and just 250 

firms in its Exhibit C. Moreover, the 

Economic Census only includes the 

revenue data for the U.S. based 

companies; however, the data provided 

by the commenter appears to include 

the revenue data for the non-U.S. 

advertising companies as well. The data 

might have even included the 

companies for which advertising is not 

their primary activity. SBA surveyed 

other available industry data sources 

and determined that the special 

tabulation of the 2012 Economic Census 

was still the latest (when the November 

2020 proposed rule was drafted) and 

most comprehensive data source 

available for evaluating all industries 

consistently and on the same terms. The 

Economic Census provides information 

across all industries under its scope, 

using uniform definitions and measures, 

which allow for consistent industry 

comparisons at the same moment in 

time. Because the firm size distribution 

does not change drastically from one 

Economic Census to the next, the data 

retains its usefulness even if it is not 

produced in a recent year. SBA recently 

received a preliminary special 

tabulation based on the 2017 Economic 

Census. SBA found that the industry 

structure for NAICS 541810 has not 

drastically changed in the 2017 

tabulation as compared to the 2012 

tabulation. For example, SBA found that 

under the SBA’s $22.5 million proposed 

size standard for NAICS 541810, 98% of 

firms are classified as small based on 

the 2012 Economic Census tabulation, 

as compared to 97.3% of firms that 

would qualify as small under the 

proposed size standard based on the 

2017 Economic Census data tabulation. 

Moreover, as explained in the 

methodology section of the November 

2020 proposed rule, SBA did not rely 

solely on 2012 Economic Census data to 

evaluate all industry factors. For 

example, SBA used the RMA data 

(http://www.rmahq.org/estatementstudies/) for fiscal years 2016–18 to 

determine the sales (receipts) to total 

assets ratio for an industry which is 

then used to calculate the ‘‘average 

assets’’ factor (proxy for start-up costs 

and entry barriers) by applying the ratio 

to the average receipts of firms in an 

industry. An industry with average 

assets that are significantly higher than 

most other industries is likely to have 

higher startup costs; this in turn will 

support a higher size standard. 

Conversely, an industry with average 

assets that are lower than most other 

industries is likely to have lower startup 

costs; this will support either lowering 

or maintaining the size standard. 

Regarding NAICS 541810, specifically, 

SBA used the recent data to calculate an 

average asset size of $0.9 million which 

supported a size standard of $11 

million. 

Similarly, SBA used FPDS–NG data 

from fiscal years 2016–2018 to evaluate 

the Federal contracting factor, which 

measures small business participation 

in the Federal market in terms of the 

share of total Federal contract dollars 

awarded to small businesses relative to 

the small business share of an industry’s 

total receipts. In general, if the share of 

Federal contract dollars awarded to 

small businesses in an industry is 

significantly smaller than the small 

business share of total industry’s 

receipts, all else remaining the same, a 

justification would exist for considering 

a size standard higher than the current 

size standard. In cases where small 

business share of the Federal market is 

already appreciably high relative to the 

small business share of the overall 

market, SBA generally assumes that the 

existing size standard is adequate with 


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respect to the Federal contracting factor. 

Regarding NAICS 541810, specifically, 

using the FPDS–NG data for fiscal years 

2016–2018 (the latest available when 

the proposed rule was drafted), SBA 

calculated a Federal contracting factor 

of ¥20.8% which supported a size 

standard of $20 million. 

In response to the commenter’s 

suggestion that SBA should allow 

advertising agencies to exclude 

subcontractor costs (usually referred to 

as ‘‘pass-throughs’’), SBA reviewed its 

current definition of receipts and its 

prior rulemakings where it has received 

similar comments on this issue. SBA 

found that this suggestion is not new, 

nor is it unique to NAICS 541810. SBA’s 

definition of receipts states the 

following: ‘‘Receipts means ‘total 

income’ (or in the case of a sole 

proprietorship, ‘gross income’) plus 

‘cost of goods sold’ as these terms are 

defined and reported on Internal 

Revenue Service (IRS) tax return forms 

. . . .’’ 13 CFR 121.104. The definition 

of receipts provides for several 

exclusions, including amounts collected 

for another by an advertising agent. 13 

CFR 121.104(a). In calculating the 

revenue of an advertising agent, SBA 

excludes funds received in trust for an 

unaffiliated third party (such as 

bookings or sales subject to 

commissions), but includes the 

commissions received as revenue (see 

Footnote 10 to the SBA’s Table of Size 

Standards in 13 CFR 121.201). The 

exclusions do not apply to 

subcontracting, materials, or related 

costs. SBA recognizes that 

subcontracting and material costs can be 

more substantial for some businesses 

and industries than for others. The 

Economic Census data that SBA uses in 

its size standards analysis includes all 

sources of revenues received by 

companies, including the values of their 

subcontracts. If the agency excluded the 

value of ‘‘pass-throughs’’ or 

subcontracting revenues from the 

calculation of receipts, SBA would have 

to adjust its methodology to establish a 

lower size standard to reflect the size of 

the industry without the subcontracting 

or ‘‘pass-through’’ costs. 

Generally, SBA includes all revenues 

in its calculation of receipts—first, 

because Economic Census data includes 

them, as stated above, and second, 

because SBA’s existing definitions of 

receipts and employees provide a 

consistent approach to measuring 

business size for establishing eligibility 

for small business programs for all 

industries. If SBA were to exclude 

certain costs from revenue calculation 

for one or a few industries, the 

participants in other industries could 

raise the same issue. This would create 

a ‘‘slippery slope’’ leading toward 

widespread inconsistency in how 

businesses calculate their receipts to 

determine if they are small. The better 

solution would be to have higher size 

standards than otherwise supported by 

industry and Federal contracting factors 

for industries with high ‘‘pass-through’’ 

costs, so that the size standards reflect 

the realities of how such firms conduct 

their business. Again, SBA’s current 

definition of receipts is consistent with 

how businesses report their revenues for 

the Economic Census. The current 

definition is also consistent with the 

Small Business Act, which provides that 

size standards are to be established 

based on ‘‘ * * * annual average gross 

receipts of the business concern . . . .’’ 

(15 U.S.C. 632(a)(2)(C)(ii)(II) [emphasis 

added]). 

SBA also disagrees with the comment 

that SBA should establish a higher size 

standard for NAICS 541810 to match the 

proposed size standards for other 

industries, namely NAICS 541830 

(Media Buying Agencies—$28.5 

million), NAICS 541511 (Custom 

Computer Programing Services—$30 

million), and NAICS 541512 (Computer 

Systems Design Services—$30 million). 

Although these industries may have 

related or co-dependent business 

activities with Advertising Agencies, 

SBA’s analysis of these industries, as 

detailed in Table 4 of the November 

2020 proposed rule, demonstrates that 

their industry structures and the 

economic characteristics of the firms 

providing services under these 

industries are markedly different, 

justifying a unique size standard for 

each industry. 

According to the NAICS manual, the 

Advertising Agencies industry 

comprises establishments primarily 

engaged in creating advertising 

campaigns and placing such advertising 

in periodicals, newspapers, radio and 

television, or other media. These 

establishments are organized to provide 

a full range of services (i.e., through inhouse capabilities or subcontracting), 

including advice, creative services, 

account management, production of 

advertising material, media planning, 

and buying (i.e., placing advertising). 

NAICS 541511 and 541512, on the other 

hand, comprise of establishments 

primarily focused on planning and 

designing software and computer 

systems, and NAICS 541830 comprises 

establishments primarily engaged in 

purchasing advertising time or space 

from media outlets and reselling it to 

advertising agencies or individual 

companies directly. Among the three 

industries identified by the commenter 

as a basis for recommending a higher 

size standard of $28.5 million or $30 

million for NAICS 541810, because of 

being in the same NAICS Industry 

Group 5418 (Advertising, Public 

Relations, and Related Services), NAICS 

541830 is the closest to NAICS 541810. 

Yet, there are significant differences 

between the two industries, as shown in 

Table 5, Comparison of Primary Factors 

Between NAICS 541810 and NAICS 

541830. 

TABLE 5—COMPARISON OF PRIMARY FACTORS BETWEEN NAICS 541810 AND NAICS 541830 

Primary factor/size standard 

541810 

Adverting agencies 

541830 

Media buying agencies 

Factor Size std. Factor Size std. 

Simple average firm size ($million) ................................................................. $2.9 $16.0 $8.4 $38.5 

Weighted average firm size ($million) ............................................................. 896.3 37.0 283.3 17.0 

Average assets size ($million) ......................................................................... 0.9 11.0 2.6 20.5 

Four-firm ratio (%) ........................................................................................... 30.1% 25.5 35.7% 30.0 

Gini coefficient ................................................................................................. 0.801 29.0 0.838 35.5 

Federal contracting factor (%) ......................................................................... ¥20.8% 20.0 ........................ ........................

Calculated size standard ($million) .................................................................. ........................ 22.5 ........................ 28.5 

Proposed size standard ($million) ................................................................... ........................ 22.5 ........................ 28.5 

Current size standard ($million) ....................................................................... ........................ 16.5 ........................ 16.5 


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As can be seen from Table 5, there are 

significant differences with respect to 

factor values and supported size 

standards between NAICS 541810 and 

NAICS 541830. For example, with a 

value of ¥20.8% the Federal 

contracting factor is significant for 

NAICS 541810 supporting a size 

standard of $20 million, but it is not 

significant for NAICS 541830. With 

respect to industry factors, only the 

weighted average firm size supports a 

higher size standard for NAICS 541810. 

All other industry factors support higher 

size standards for NAICS 541830, 

producing a higher $28.5 million 

calculated size standard for the 

industry, as compared to a $22.5 million 

size standard for NAICS 541810. Thus, 

SBA believes that the differences in the 

primary business activity of the firms 

participating in each industry justifies 

maintaining a separate size standard for 

each of the aforementioned NAICS 

industries. 

Therefore, for the reasons presented 

above, SBA accepts the analytical 

results and, in this final rule, and adopts 

the $22.5 million size standard for 

NAICS 541810 (Advertising Agencies), 

as proposed. Based on the 2012 

Economic Census tabulation, 98% of 

firms would qualify as small, thereby 

providing a robust pool of qualified 

small businesses for Federal set-aside 

opportunities. 

Comments on Proposed Changes to 

NAICS 541930—Translation and 

Interpretation Services 

SBA received a total of 24 comments 

concerning its proposal to increase the 

size standard for NAICS 541930 

(Translation and Interpretation Services) 

from $8 million to $20 million in 

average annual receipts. Of the 24 

comments received, 17 comments 

expressed support for the SBA’s 

proposed increase, while seven 

comments opposed the increase. These 

comments and SBA’s responses are 

discussed below. 

Comments Supporting the Proposed $20 

Million Size Standard 

Fourteen of the seventeen comments 

supporting SBA’s proposal were nearly 

identical and cited rapid industry 

growth and increased competitiveness 

of small firms as the basis for their 

support for the SBA’s proposed $20 

million size standard. These 

commenters, which comprised of 

individuals, companies, and a 

university, expressed that the SBA’s 

proposed increase would match the 

rapid growth in the language industry, 

and would allow more companies to 

grow and stay competitive as small 

businesses. Other commenters in 

support of the proposed increase 

expressed similar reasons for their 

support, citing increased demand for 

translation services in recent years and 

the increased capital requirements for 

translation services providers. For 

example, a firm providing sign language 

interpreting services expressed that the 

$20 million size standard was 

appropriate because larger investments 

are needed by firms in the industry to 

meet the growing demands of 

technology, security provisions and 

other compliance standards required by 

customers. 

One commenter noted that Federal 

contract values for language services 

continue to grow, and that the proposed 

increase to the size standard will 

increase set-aside opportunities for 

small businesses and ensure that the 

Federal Government has an adequate 

pool of small businesses to meet its 

growing needs for language and 

interpretation services. The same 

commenter also stated that increasing 

the size standard would also promote 

small business subcontracting by 

allowing small business subcontractors 

to remain small and continue to operate 

under prime contracts. One commenter 

mentioned that Government contracts 

have become larger and larger and a 

single contract can easily reach the size 

threshold. 

SBA’s Response 

SBA agrees with the commenters that 

the higher $20 million size standard 

reflects current market conditions in the 

language and interpretation services 

industry, will allow small businesses to 

grow remain small for an extended 

period, expand Federal opportunities 

for small businesses, and provide the 

Government with an expanded pool of 

qualified small businesses to meet their 

growing translation and interpretation 

services needs. 

Comments Opposing the Proposed $20 

Million Size Standard 

Commenters opposed to SBA’s 

proposed increase to the size standard 

for NAICS 541930 included six language 

interpretation firms and one individual, 

of which six proposed to leave the size 

standard unchanged at $8 million and 

one suggested lowering it to $4 million. 

One commenter maintained that 

considering the unprecedented impact 

of the COVID–19 pandemic on small 

businesses, SBA should not be 

increasing the size standard in the 

current environment. All commenters 

opposed the proposed increase to the 

size standard over concerns that it 

would unfairly disadvantage the 

population of currently small firms, 

especially the smallest of small firms. 

One commenter expressed that SBA’s 

proposed size standard would lead to 

buyouts and mergers initiated by larger 

firms that would ultimately put small 

companies out of business. Another 

argued that a company with a $20 

million revenue does not need 

Government assistance. Three 

commenters suggested that SBA create 

multiple size classifications within the 

industry to identify and target resources 

towards firms that are ‘‘truly’’ small and 

ensure that very large businesses are not 

able to access resources intended for 

small businesses. One commenter 

recommended that SBA define the size 

classifications in this industry as 

follows: Below $8 million as ‘‘small’’; 

from $8 million to $20 million as 

‘‘medium’’; from $20 million to $100 

million as ‘‘large’’; and above $100 

million as ‘‘extra-large.’’ Another 

commenter recommended that SBA 

adopt an employee-based size standard 

for this industry to provide a more even 

playing field but did not provide 

additional data or information to 

support this recommendation. 

SBA’s Response 

Although SBA recognizes the 

challenges that both very small and 

mid-sized businesses face in the Federal 

market, SBA believes that suggested 

tiered size standards would add 

significant complexity to size standards, 

which many believe are already too 

complex. For the tiered size standards 

approach to work as envisioned by its 

proponents, small business contracting 

goals would need to be established at 

each tier to ensure that small businesses 

at different tiers have fair access to 

Federal small business contracts. 

Moreover, the Small Business Act gives 

SBA’s Administrator the authority to 

determine what constitutes a small 

business concern for Federal 

Government programs, but the Act does 

not provide for definitions of other than 

small businesses. As such, SBA does not 

agree with commenters that it should 

create multiple size classifications 

within the industry. SBA also disagrees 

with the comment that number of 

employees is a better measure of 

business size than the level of receipts 

for this industry. The Small Business 

Act requires that the size of businesses 

in services industries be based on 

average annual gross receipts. 

Additionally, for industries where 

subcontracting is widespread, such as 

many professional services industries, 

including Translation and Interpretation 

Services, SBA is concerned that an 

employee-based size standard may 


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encourage businesses to excessively 

outsource Federal work to other 

businesses to remain within the size 

standard. Under the receipts-based size 

standard, businesses are not allowed to 

deduct value of work outsourced, and 

therefore cannot reduce their size by 

outsourcing a higher proportion of 

work. 

Regarding commenters’ concern that 

raising the size standard will 

disadvantage the smallest of small firms 

in this industry, SBA notes that 

increasing size standards does not 

necessarily put firms that are small 

under the current size standard at a 

competitive disadvantage. In fact, 

increasing size standards can have an 

opposite impact. With higher size 

standards and a larger pool of 

businesses qualifying as small, Federal 

agencies are likely to utilize more small 

business set-asides, thereby increasing 

opportunities for all small businesses. 

As stated above, most of the comments 

received to the proposed rule regarding 

the size standard for NAICS 541930 

supported the proposed $20 million size 

standard, contending, in part, that this 

increase will enable firms below that 

level to develop and become 

competitively viable. SBA agrees with 

these commenters that the proposed 

increase to size standard for NAICS 

541930 will benefit all small businesses 

and better reflect the economic 

characteristics of the industry. 

For the above reasons, SBA is 

adopting the $20 million size standard 

for NAICS 541930, as proposed. 

Comments on Proposed Changes to All 

Sectors 

SBA received six comments to the 

proposed rule that did not discuss 

SBA’s proposed changes to size 

standards for any particular industry or 

sector, but instead, focused on broader 

issues applicable to all sectors. Of the 

six comments received, four comments 

were opposed to SBA’s proposed 

changes and two comments were in 

favor. Three commenters opposed to 

SBA’s proposed changes expressed that 

the general levels of size standards are 

already too high. One opposing 

commenter suggested that a possible 

small business definition of 50 

employees or less and receipts of $1 

million or less may be more appropriate. 

Another commenter expressed similar 

concerns and suggested that SBA create 

a micro small business designation. 

Another commenter opposed SBA’s 

proposed size standards based on the 

level of fraudulent activity that occurred 

during the execution of the Paycheck 

Protection Program (PPP). This 

commenter argued that SBA’s resources 

should be used to curtail fraud in the 

PPP prior to developing a rule adjusting 

size standards. Comments in favor of 

SBA’s proposed rule expressed that 

SBA’s proposed size standards better 

reflected the current industry 

composition for the industries covered 

by this rulemaking. One commenter also 

supported proposed changes based on 

SBA’s policy decision to not lower size 

standards at this time considering the 

impact from the COVID–19 induced 

economic recession. 

SBA’s Response 

SBA does not agree with commenters 

that the general level of size standards 

is too high and that the maximum 

thresholds should be set at $1 million or 

50 employees. SBA’s size standards 

methodology has established minimum 

and maximum limits for receipts-based 

and employee-based size standards (84 

FR 14587 (April 11, 2019)). Prior to 

finalizing the methodology, SBA issued 

a notification in the April 27, 2018, 

edition of the Federal Register (83 FR 

18468) to solicit comments from the 

public and notify stakeholders of the 

proposed changes to the methodology. 

SBA considered all public comments in 

finalizing the revised methodology. For 

a summary of comments and SBA’s 

responses, refer to the SBA’s April 11, 

2019, Federal Register notification cited 

above. With respect to receipts-based 

size standards, SBA has established $6 

million and $41.5 million, respectively, 

as the minimum and maximum size 

standard levels (except for most 

agricultural industries in NAICS 

Subsectors 111 and 112 for which $1 

million and $5 million are the minimum 

and maximum levels, respectively). 

Under this rule, SBA is not considering 

comments pertaining to its size 

standards methodology, which was 

already finalized through notice and 

comment process prior to this review. 

SBA also disagrees with the comment 

that SBA’s resources should be wholly 

devoted to preventing abuse of PPP 

loans at the expense of completing the 

comprehensive review of size standards. 

As discussed earlier in this rule, in 

accordance with the Jobs Act, SBA is 

mandated to review all size standards 

every five years and make necessary 

adjustments to reflect current industry 

and market conditions. SBA does not 

have the authority to suspend this 

requirement, nor does it believe that it 

would be in the public’s best interest to 

suspend or terminate this review. SBA 

agrees with commenters that the size 

standards contained in the proposed 

rule better reflect the composition and 

economic characteristics of the 

underlying industries. SBA also agrees 

that its policy to not lower size 

standards at this time based on the 

analytical results is appropriate and 

reduces the level of uncertainty for 

small businesses as the wider economy 

continues to improve. 

Conclusion 

Based on the results of the analysis of 

industry and Federal contracting factors 

in Table 4 of the November 2020 

proposed rule, evaluation of public 

comments to the proposed rule 

discussed above, and consideration of 

the impact of the COVID–19 pandemic 

on small businesses and Government 

response, in this final rule, SBA is 

adopting its proposal to increase 46 and 

retain 48 receipts-based size standards 

in Sectors 54, 55, and 56 without 

change. 

Summary of Adopted Revisions to Size 

Standards 

Based on the evaluation of public 

comments it received on the proposed 

rule and on the results of analyses of its 

industry and Federal contracting factors 

using the latest available data and 

considerations of the impact of the 

COVID–19 pandemic on small 

businesses and Government response, 

SBA is adopting the size standards as 

proposed in the November 2020 

proposed rule. Thus, SBA is increasing 

the size standards for 46 industries in 

Sectors 54, 55, and 56, including 27 

industries in NAICS Sector 54 

(Professional, Scientific and Technical 

Services), 2 industries in Sector 55 

(Management of Companies and 

Enterprises), and 17 industries in Sector 

56 (Administrative and Support and 

Waste Management and Remediation 

Services). A summary of SBA’s size 

standards revisions in this rule can be 

found below in Table 6, Summary of 

Size Standards Revisions in NAICS 

Sectors 54, 55, and 56. 


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TABLE 6—SUMMARY OF SIZE STANDARDS REVISIONS IN NAICS SECTORS 54, 55, AND 56 

NAICS code NAICS U.S. industry title 

Current size 

standard 

($ million) 

Calculated 

size standard 

($ million) 

Adopted size 

standard 

($ million) 

541110 ................................... Offices of Lawyers .................................................................. 12.0 13.5 13.5 

541191 ................................... Title Abstract and Settlement Offices ..................................... 12.0 17.0 17.0 

541199 ................................... All Other Legal Services ......................................................... 12.0 18.0 18.0 

541211 ................................... Offices of Certified Public Accountants .................................. 22.0 23.5 23.5 

541213 ................................... Tax Preparation Services ....................................................... 22.0 12.0 22.0 

541214 ................................... Payroll Services ...................................................................... 22.0 34.5 34.5 

541219 ................................... Other Accounting Services ..................................................... 22.0 17.5 22.0 

541310 ................................... Architectural Services ............................................................. 8.0 11.0 11.0 

541320 ................................... Landscape Architectural Services .......................................... 8.0 6.5 8.0 

541330 ................................... Engineering Services .............................................................. 16.5 22.5 22.5 

541330 (Exception 1) ............. Military and Aerospace Equipment and Military Weapons ..... 41.50 39.00 41.50 

541330 (Exception 2) ............. Contracts and Subcontracts for Engineering Services 

Awarded Under the National Energy Policy Act of 1992.

41.50 39.00 41.50 

541330 (Exception 3) ............. Marine Engineering and Naval Architecture ........................... 41.50 41.50 41.50 

541340 ................................... Drafting Services ..................................................................... 8.0 7.0 8.0 

541350 ................................... Building Inspection Services ................................................... 8.0 10.0 10.0 

541360 ................................... Geophysical Surveying and Mapping Services ...................... 16.5 25.0 25.0 

541370 ................................... Surveying and Mapping (except Geophysical) Services ........ 16.5 14.0 16.5 

541380 ................................... Testing Laboratories ............................................................... 16.5 16.5 16.5 

541410 ................................... Interior Design Services .......................................................... 8.0 6.5 8.0 

541420 ................................... Industrial Design Services ...................................................... 8.0 15.0 15.0 

541430 ................................... Graphic Design Services ........................................................ 8.0 7.5 8.0 

541490 ................................... Other Specialized Design Services ........................................ 8.0 12.0 12.0

541511 ................................... Custom Computer Programming Services ............................. 30.0 20.5 30.0 

541512 ................................... Computer Systems Design Services ...................................... 30.0 27.0 30.0 

541513 ................................... Computer Facilities Management Services ............................ 30.0 32.5 32.5 

541519 ................................... Other Computer Related Services .......................................... 30.0 21.0 30.0 

541611 ................................... Administrative Management and General Management Consulting Services.16.5 21.5 21.5 

541612 ................................... Human Resources Consulting Services ................................. 16.5 25.5 25.5 

541613 ................................... Marketing Consulting Services ............................................... 16.5 14.5 16.5 

541614 ................................... Process, Physical Distribution, and Logistics Consulting 

Services.

16.5 17.5 17.5 

541618 ................................... Other Management Consulting Services ................................ 16.5 13.0 16.5 

541620 ................................... Environmental Consulting Services ........................................ 16.5 13.5 16.5 

541690 ................................... Other Scientific and Technical Consulting Services ............... 16.5 15.5 16.5 

541720 ................................... Research and Development in the Social Sciences and Humanities.22.0 24.5 24.5 

541810 ................................... Advertising Agencies .............................................................. 16.5 22.5 22.5 

541820 ................................... Public Relations Agencies ...................................................... 16.5 15.0 16.5 

541830 ................................... Media Buying Agencies .......................................................... 16.5 28.5 28.5 

541840 ................................... Media Representatives ........................................................... 16.5 18.5 18.5 

541850 ................................... Outdoor Advertising ................................................................ 16.5 30.5 30.5 

541860 ................................... Direct Mail Advertising ............................................................ 16.5 19.5 19.5 

541870 ................................... Advertising Material Distribution Services .............................. 16.5 25.0 25.0

541890 ................................... Other Services Related to Advertising ................................... 16.5 16.0 16.5

541910 ................................... Marketing Research and Public Opinion Polling .................... 16.5 20.0 20.0 

541921 ................................... Photography Studios, Portrait ................................................. 8.0 14.0 14.0 

541922 ................................... Commercial Photography ....................................................... 8.0 8.0 8.0 

541930 ................................... Translation and Interpretation Services .................................. 8.0 20.0 20.0

541940 ................................... Veterinary Services ................................................................. 8.0 9.0 9.0 

541990 ................................... All Other Professional, Scientific and Technical Services ...... 16.5 17.0 17.0 

551111 ................................... Offices of Bank Holding Companies ....................................... 22.0 34.0 34.0

551112 ................................... Offices of Other Holding Companies ...................................... 22.0 40.0 40.0

561110 ................................... Office Administrative Services ................................................ 8.0 11.0 11.0 

561210 ................................... Facilities Support Services ..................................................... 41.5 32.5 41.5 

561311 ................................... Employment Placement Agencies .......................................... 30.0 21.0 30.0 

561312 ................................... Executive Search Services ..................................................... 30.0 12.0 30.0 

561320 ................................... Temporary Help Services ....................................................... 30.0 26.5 30.0 

561330 ................................... Professional Employer Organizations ..................................... 30.0 36.5 36.5

561410 ................................... Document Preparation Services ............................................. 16.5 16.5 16.5 

561421 ................................... Telephone Answering Services .............................................. 16.5 14.5 16.5 

561422 ................................... Telemarketing Bureaus and Other Contact Centers .............. 16.5 22.5 22.5 

561431 ................................... Private Mail Centers ............................................................... 16.5 8.5 16.5 

561439 ................................... Other Business Service Centers (including Copy Shops) ...... 16.5 23.5 23.5 

561440 ................................... Collection Agencies ................................................................ 16.5 17.0 17.0 

561450 ................................... Credit Bureaus ........................................................................ 16.5 36.0 36.0 

561491 ................................... Repossession Services ........................................................... 16.5 9.0 16.5 

561492 ................................... Court Reporting and Stenotype Services ............................... 16.5 14.0 16.5 

561499 ................................... All Other Business Support Services ..................................... 16.5 19.0 19.0


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TABLE 6—SUMMARY OF SIZE STANDARDS REVISIONS IN NAICS SECTORS 54, 55, AND 56—Continued 

NAICS code NAICS U.S. industry title 

Current size 

standard 

($ million) 

Calculated 

size standard 

($ million) 

Adopted size 

standard 

($ million) 

561510 ................................... Travel Agencies ...................................................................... 22.0 19.0 22.0 

561520 ................................... Tour Operators ....................................................................... 22.0 13.5 22.0 

561591 ................................... Convention and Visitors Bureaus ........................................... 22.0 13.5 22.0 

561599 ................................... All Other Travel Arrangement and Reservation Services ...... 22.0 28.5 28.5 

561611 ................................... Investigation Services ............................................................. 22.0 21.5 22.0 

561612 ................................... Security Guards and Patrol Services ..................................... 22.0 25.5 25.5

561613 ................................... Armored Car Services ............................................................ 22.0 38.0 38.0 

561621 ................................... Security Systems Services (except Locksmiths) .................... 22.0 20.5 22.0 

561622 ................................... Locksmiths .............................................................................. 22.0 7.0 22.0 

561710 ................................... Exterminating and Pest Control Services ............................... 12.0 15.5 15.5 

561720 ................................... Janitorial Services ................................................................... 19.5 15.0 19.5 

561730 ................................... Landscaping Services ............................................................. 8.0 8.5 8.5 

561740 ................................... Carpet and Upholstery Cleaning Services ............................. 6.0 7.5 7.5 

561790 ................................... Other Services to Buildings and Dwellings ............................ 8.0 8.0 8.0 

561910 ................................... Packaging and Labeling Services .......................................... 12.0 17.0 17.0 

561920 ................................... Convention and Trade Show Organizers ............................... 12.0 17.5 17.5 

561990 ................................... All Other Support Services ..................................................... 12.0 14.5 14.5 

562111 ................................... Solid Waste Collection ............................................................ 41.5 34.0 41.5 

562112 ................................... Hazardous Waste Collection .................................................. 41.5 31.0 41.5 

562119 ................................... Other Waste Collection ........................................................... 41.5 25.0 41.5 

562211 ................................... Hazardous Waste Treatment and Disposal ............................ 41.5 39.0 41.5 

562212 ................................... Solid Waste Landfill ................................................................ 41.5 39.0 41.5 

562213 ................................... Solid Waste Combustors and Incinerators ............................. 41.5 41.0 41.5 

562219 ................................... Other Nonhazardous Waste Treatment and Disposal ........... 41.5 24.5 41.5 

562910 ................................... Remediation Services ............................................................. 22.0 18.5 22.0 

562920 ................................... Materials Recovery Facilities .................................................. 22.0 21.5 22.0 

562991 ................................... Septic Tank and Related Services ......................................... 8.0 8.0 8.0 

562998 ................................... All Other Miscellaneous Waste Management Services ......... 8.0 14.5 14.5 

Table 7, Summary of Revised Size 

Standards by Sector, summarizes the 

adopted changes to size standards by 

NAICS sector. 

TABLE 7—SUMMARY OF REVISED SIZE STANDARDS BY SECTOR

NAICS sector Sector name 

Number of 

size standards 

reviewed 

Number of 

size standards 

increased 

Number of 

size standards 

decreased 

Number of 

size standards 

maintained 

54 .................................. Professional, Scientific and Technical Services .. 48 27 0 21 

55 .................................. Management of Companies and Enterprises ...... 2 2 0 0 

56 .................................. Administrative and Support, Waste Management 

and Remediation Services.

44 17 0 27 

All Sectors .............. .............................................................................. 94 46 0 48 

Evaluation of Dominance in Field of 

Operation 

SBA determined that for the 

industries evaluated under the under 

this final rule, no individual firm at or 

below the revised size standards would 

be large enough to dominate its field of 

operation. At the size standard levels 

adopted in this final rule, the small 

business share of total industry receipts 

among those industries would be, on 

average, 0.4%, varying from 0.005% to 

4.8%. These market shares effectively 

preclude a firm at or below the revised 

size standards from exerting control on 

any of the industries. 

Alternatives Considered 

In response to the unprecedented 

economic impacts of the COVID–19 

pandemic on small businesses, SBA is 

adopting increases to size standards 

where the data suggests increases are 

warranted, and retaining all current size 

standards where the data suggested 

lowering or retaining is appropriate. 

Nonetheless, SBA considered two 

other alternatives. Alternative Option 

One was to adopt changes to size 

standards exactly as suggested by the 

analytical results. In other words, 

Alternative Option One would entail 

increasing size standards for 46 

industries, decreasing them for 42 

industries, and retaining them at their 

current levels for 6 industries. 

Alternative Option Two was to retain all 

current size standards at their current 

levels. 

SBA did not adopt Alternative Option 

One because it would cause a 

substantial number of currently small 

businesses to lose their small business 

status and hence to lose their access to 

Federal small business assistance, 

especially small business set-aside 

contracts and SBA’s financial assistance 

in some cases. Lowering size standards 

in the current environment would run 

counter to various measures the Federal 

Government has implemented to help 

U.S. small businesses and the overall 

economy recover from the ongoing 

COVID–19 pandemic. Considering the 

impacts of the Great Recession and 


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Government actions that followed to 

support small businesses and the overall 

economy, SBA also adopted a similar 

policy of not decreasing size standards 

during the first five-year review of size 

standards, even though the data 

suggested decreases. 

Under Alternative Option Two, given 

the current COVID–19 pandemic, SBA 

considered retaining all size standards 

at their current levels even though the 

analysis of relevant data suggested 

changing them. Under this option, as 

the current situation develops, SBA will 

be able to assess new data available on 

economic indicators, federal 

procurement, and SBA loans before 

adopting changes to size standards. 

However, SBA is not adopting 

Alternative Option Two either because 

the results discussed in the Regulatory 

Impact Analysis section, below, shows 

that retaining all size standards at their 

current levels would cause otherwise 

qualified small businesses to forgo 

various small business benefits 

becoming available to them under the 

option of increasing 46 and retaining 48 

size standards adopted in this final rule. 

Such benefits would include access to 

Federal contracts set aside for small 

businesses and capital through SBA’s 

loan and SBIC programs, and 

exemptions from paperwork and other 

compliance requirements. 

Compliance With Executive Orders 

12866, the Congressional Review Act (5 

U.S.C. 801–808), the Regulatory 

Flexibility Act (5 U.S.C. 601–612), 

Executive Orders 13563, 12988, and 

13132, and the Paperwork Reduction 

Act (44 U.S.C. Ch. 35) 

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, in the next section SBA 

provides a Regulatory Impact Analysis 

of this final rule, including (1) A 

statement of the need for the regulatory 

action, (2) An examination of alternative 

approaches, and (3) An evaluation of the 

benefits and costs—both quantitative 

and qualitative—of this regulatory 

action and the alternatives considered. 

Regulatory Impact Analysis 

1. What is the need for this regulatory 

action? 

SBA’s mission is to aid and assist 

small businesses through a variety of 

financial, procurement, business 

development and counseling, and 

disaster assistance programs. To 

determine the actual intended 

beneficiaries of these programs, SBA 

establishes numerical size standards by 

industry to identify businesses that are 

deemed small. 

Under the Small Business Act (Act) 

(15 U.S.C. 632(a)), SBA’s Administrator 

is responsible for establishing small 

business size definitions (or ‘‘size 

standards’’) and ensuring that such 

definitions vary from industry to 

industry to reflect differences among 

various industries. The Jobs Act requires 

SBA to review every five years all size 

standards and make necessary 

adjustments to reflect current industry 

and Federal market conditions. This 

final rule is part of the second five-year 

review of size standards in accordance 

with the Jobs Act. The first five-year 

review of size standards was completed 

in early 2016. Such periodic reviews of 

size standards provide SBA with an 

opportunity to incorporate ongoing 

changes to industry structure and 

Federal market environment into size 

standards and to evaluate the impacts of 

prior revisions to size standards on 

small businesses. This also provides 

SBA with an opportunity to seek and 

incorporate public input to the size 

standards review and analysis. SBA 

believes that the size standards 

revisions adopted for industries being 

reviewed in this final rule will make 

size standards more reflective of the 

current economic characteristics of 

businesses in those industries and the 

latest trends in Federal marketplace. 

The revisions to the existing size 

standards for 46 industries in NAICS 

Sectors 54, 55, and 56 are consistent 

with SBA’s statutory mandate to help 

small businesses grow and create jobs 

and to review and adjust size standards 

every five years. This regulatory action 

promotes the Administration’s goals and 

objectives as well as meets the SBA’s 

statutory responsibility. One of SBA’s 

goals in support of promoting the 

Administration’s objectives is to help 

small businesses succeed through fair 

and equitable access to capital and 

credit, Federal Government contracts 

and purchases, and management and 

technical assistance. Reviewing and 

modifying size standards, when 

appropriate, ensures that intended 

beneficiaries can access Federal small 

business programs that are designed to 

assist them to become competitive and 

create jobs. 

2. What are the potential benefits and 

costs of this regulatory action? 

OMB directs agencies to establish an 

appropriate baseline to evaluate any 

benefits, costs, or transfer impacts of 

regulatory actions and alternative 

approaches considered. The baseline 

should represent the agency’s best 

assessment of what the world would 

look like absent the regulatory action. 

For a new regulatory action 

promulgating modifications to an 

existing regulation (such as modifying 

the existing size standards), a baseline 

assuming no change to the regulation 

(i.e., making no changes to current size 

standards) generally provides an 

appropriate benchmark for evaluating 

benefits, costs, or transfer impacts of 

regulatory changes and their 

alternatives. 

Changes to Size Standards 

Based on the results from the analysis 

of the latest industry and Federal 

contracting data, as well as 

consideration of the impact of size 

standards changes on small businesses 

and significant adverse impacts of the 

COVID–19 emergency on small 

businesses and the overall economic 

activity, of the total of 94 industries in 

Sectors 54, 55, and 56 that have 

receipts-based size standards, SBA is 

adopting increases to size standards for 

46 industries and maintaining current 

size standards for the remaining 48 

industries (including exceptions). 

The Baseline 

For purposes of this regulatory action, 

the baseline represents maintaining the 

‘‘status quo,’’ i.e., making no changes to 

the current size standards. Using the 

number of small businesses and levels 

of benefits (such as set-aside contracts, 

SBA’s loans, disaster assistance, etc.) 

they receive under the current size 

standards as a baseline, one can 

examine the potential benefits, costs, 

and transfer impacts of changes to size 

standards on small businesses and on 

the overall economy. 

Based on the 2012 Economic Census 

(the latest available), of a total of about 

1,096,800 businesses in industries in 

Sectors 54, 55, and 56, 97.9% are 

considered small under the current size 

standards. That percentage varies from 

65.3% in Sector 55 to 98.4% in Sector 

54. Based on the data from FPDS–NG for 

fiscal years 2018–2020, about 36,685 

unique firms in those industries 

received at least one Federal contract 

during that period, of which 80.1% 

were small under the current size 

standards. A total of $154 billion in 

average annual contract dollars were 

awarded to businesses in those 

industries during the period of 

evaluation, and 33.9% of the dollars 

awarded went to small businesses. For 

these sectors, providing contract dollars 

to small business through set-asides is 

quite important. From the total small 

business contract dollars awarded 

during the period considered, 71.9% 


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2The analysis of the disaster loan data excludes 

physical disaster loans that are available to anyone 

regardless of size, disaster loans issued to nonprofit 

entities, and EIDLs issued under the COVID–19 

relief program. Effective January 1, 2022, SBA 

stopped accepting applications for new COVID 

EIDL loans or advances. Thus, the disaster loan 

analysis here pertains to the regular EIDL loans 

only. 

SBA estimates impacts of size standards changes 

on EIDL loans by calculating the ratio of businesses 

getting EIDL loans to total small businesses (based 

on the Economic Census data) and multiplying it 

by the number of impacted small firms. Due to data 

limitations, for FY 2019–20, some loans with both 

physical and EIDL loan components could not be 

broken into the physical and EIDL loan amounts. 

In such cases, SBA applied the ratio of EIDL 

amount to total (physical loan + EIDL) amount 

using FY 2016–18 data to the FY 2019–20 data to 

obtain the amount attributable to the EIDL loans. 

were awarded through various small 

business set-aside programs and 28.1% 

were awarded through non-set set-aside 

contracts. Based on the SBA’s internal 

data on its loan programs for fiscal years 

2018–2020, small businesses in those 

industries received, on an annual basis, 

a total of 7,955 7(a) and 504 loans in 

that period, totaling about $2.9 billion, 

of which 83.4% was issued through the 

7(a) program and 16.6% was issued 

through the 504/CDC program. During 

fiscal years 2018–2020, small businesses 

in those industries also received 527 

loans through the SBA’s Economic 

Injury Disaster Loan (EIDL) program, 

totaling about $23.8 million on an 

annual basis.2 Table 8, Baseline for All 

Industries, below, provides these 

baseline results by sector. 

TABLE 8—BASELINE FOR ALL INDUSTRIES

Sector 54 Sector 55 Sector 56 Total 

Baseline All Industries (current size standards) .............................................. 48 2 44 94 

Total firms (Economic Census) ....................................................................... 760,701 7,544 328,522 1,096,767 

Total small firms under current size standards (Economic Census) .............. 748,170 4,926 320,672 1,073,769 

Small firms as % of total firms ......................................................................... 98.3% 65.3% 97.6% 97.9%

Total contract dollars ($ million) (FPDS–NG FY2018–2020) .......................... $113,299 $0.1 $40,300 $153,600 

Total small business contract dollars under current standards ($ million) 

(FPDS–NG FY2018–2020) .......................................................................... $41,227 $0.0 $10,810 $52,037 

Small business dollars as % of total dollars (FPDS–NG FY2016–2020) ....... 36.4% 1.1% 26.8% 33.9% 

Total no. of unique firms getting contracts (FPDS–NG FY2018–2020) .......... 25,173 3 13,887 36,685 

Total no. of unique small firms getting small business contracts (FPDS–NG 

FY2018–2020) .............................................................................................. 19,476 1 11,479 29,374 

Small business firms as % of total firms ......................................................... 77.4% 33.3% 82.7% 80.1% 

No. of 7(a) and 504/CDC loans (FY 2018–2020) ........................................... 5,120 43 2,792 7,955 

Amount of 7(a) and 504 loans ($ million) (FY 2018–2020) ............................ $1,979 $30 $871 $2,881 

No. of EIDL loans (FY 2018–2020) * ............................................................... 364 1 162 527 

Amount of EIDL loans ($ million) (FY 2018–2020) * ....................................... $16.5 $0.02 $7.3 $23.8 

* Excludes COVID–19 related EIDL loans due to their temporary nature. Effective January 1, 2022, SBA stopped accepting applications for 

new COVID EIDL loans or advances. 

Increases to Size Standards 

As stated above, of 94 receipts-based 

size standards in Sectors 54, 55, and 56 

reviewed, based on the results from 

analyses of latest industry and Federal 

market data as well as impacts of size 

standards changes on small businesses 

and the considerations of the impact of 

the COVID–19 pandemic and public 

comments to the proposed rule, in this 

final rule, SBA is increasing the size 

standards for 46 industries and retaining 

the size standards for 48 industries. 

Below are descriptions of the benefits, 

costs, and transfer impacts of these 

increases to size standards. 

The results of regulatory impact 

analyses SBA provided in the October 

2020 proposed rule were based on the 

FPDS–NG and SBA loan data for fiscal 

years 2016–2018. In this final rule, SBA 

is updating the impact analysis results 

by using the FPDS–NG and SBA loan 

data for fiscal years 2018–2020. 

Accordingly, there can be some 

differences between the proposed rule 

and this final rule with respect to 

impacts of size standards changes on 

Federal contracts and SBA loans. 

Benefits of Increasing Size Standards 

The most significant benefit to 

businesses from increases to size 

standards is gaining eligibility for 

Federal small business assistance 

programs or retaining eligibility for a 

longer period. These include SBA’s 

business loan programs, Economic 

Injury Disaster Loan (EIDL) program, 

and Federal procurement programs 

intended for small businesses. Federal 

procurement programs provide targeted, 

set-aside opportunities for small 

businesses under SBA’s various 

business development and contracting 

programs. These include the 8(a)/BD 

(Business Development) Program, the 

Small Disadvantaged Businesses (SDB) 

Program, the Historically Underutilized 

Business Zones (HUBZone) Program, 

the Women-Owned Small Businesses 

(WOSB) Program, the Economically 

Disadvantaged Women-Owned Small 

Businesses (EDWOSB) Program, and the 

Service-Disabled Veteran-Owned Small 

Businesses (SDVOSB) Program. 

Besides set-aside contracting and 

financial assistance discussed above, 

small businesses also benefit through 

reduced fees, less paperwork, and fewer 

compliance requirements that are 

available to small businesses through 

the Federal Government programs. 

However, SBA has no data to estimate 

the number of small businesses 

receiving such benefits. 

As shown in Table 9, Benefits of 

Increasing Size Standards, based on the 

2012 Economic Census (latest available), 

SBA estimates that in 46 industries in 

NAICS Sectors 54, 55, and 56 for which 

it has decided to increase size 

standards, about 2,600 firms, not small 

under the current size standards, will 

become small under the revised size 

standards and therefore become eligible 

for above programs. That represents 

about 0.4% of all firms classified as 

small under the current size standards 

in industries for which SBA is 

increasing size standards. The revised 

size standards would result in an 

increase to the small business share of 

total receipts in those industries from 

34.7% to 37%. 

With more businesses qualifying as 

small under the higher size standards, 

Federal agencies will have a larger pool 

of small businesses from which to draw 

for their small business procurement 

programs. Growing small businesses 

that are close to exceeding the current 


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size standards will be able to retain their 

small business status for a longer period 

under the higher size standards, thereby 

enabling them to continue to benefit 

from the small business programs. 

Based on the FPDS–NG data for fiscal 

years 2018–2020, SBA estimates that 

about 463 firms that are active in 

Federal contracting in those industries 

would gain small business status under 

the revised size standards. Based on the 

same data, SBA estimates that those 

newly qualified small businesses under 

the increases to 46 size standards could 

receive Federal small business contracts 

totaling about $915 million annually. 

That represents a 4.1% increase to small 

business dollars from the baseline. 

TABLE 9—IMPACTS OF INCREASING SIZE STANDARDS

Sector 54 Sector 55 Sector 56 Total 

No. of industries with increases to size standards .......................................... 27 2 17 46 

Total current small businesses in industries with Proposed increases to size 

standards (Economic Census 2012) ............................................................ 462,890 4,926 176,504 644,321 

Additional firms qualifying as small under standards (2012 Economic Census) ............................................................................................................... 1,345 527 710 2,582 

% of additional firms qualifying as small relative to current small businesses 

in industries with increases to size standards ............................................. 0.3% 10.7% 0.4% 0.4% 

No. of current unique small firms getting small business contracts in industries with increases to size standards (FPDS–NG FY2018–2020) 1 ........... 11,920 1 3,717 15,092 

Additional small business firms getting small business status (FPDS–NG 

FY2018–2020) 1 ............................................................................................ 400 ........................ 122 463

% increase to small businesses relative to current unique small firms getting small business contracts in industries with increases to size standards (FPDS–NG FY2018–2020) .................................................................. 3.4% 0.0% 3.3% 3.1% 

Total small business contract dollars under current standards in industries 

with increases to size standards ($ million) (FPDS–NG FY2018–2020) .... $19,108 $0.0 $3,044 $22,152 

Estimated small business dollars available to newly-qualified small firms 

(Using avg dollars obligated to SBs) ($ million) FPDS–NG FY 2018– 

2020) 2 .......................................................................................................... $799 $0.0 $116 $915 

% increase to small business dollars relative to total small business contract dollars under current standards in industries with increases to size 

standards ...................................................................................................... 4.2% 0.0% 3.8% 4.1% 

Total no. of 7(a) and 504 loans to small business in industries with increases to size standards (FY 2018–2020) ................................................. 2,982 43 1,446 4,471 

Total amount of 7(a) and 504 loans to small businesses in industries with 

increases to size standards ($ million) (FY 2018–2020) ............................. $1,302 $30 $436 $1,769 

Estimated no. of 7(a) and 504 loans to newly-qualified small firms ............... 9 5 6 20 

Estimated 7(a) and 504 loan amount to newly qualified small firms ($ million) ............................................................................................................... $3.9 $3.5 $1.8 $9.3 

% increase to 7(a) and 504 loan amount relative to the total amount of 7(a) 

and 504 loans in industries with increases to size standards ..................... 0.3% 11.6% 0.4% 0.5% 

Total no. of EIDL loans to small businesses in industries with increases to 

size standards (FY 2018–2020) 3 ................................................................. 222 1 87 310 

Total amount of EIDL loans to small businesses in industries with increases 

to size standards ($ million) (FY 2018–2020) 3 ........................................... $10.8 $0.02 $3.8 $14.6 

Estimated no. of EIDL loans to newly-qualified small firms 3 .......................... 1 1 1 3 

Estimated EIDL loan amount to newly-qualified small firms ($ million) 3 ........ $0.05 $0.02 $0.04 0.11 

% increase to EIDL loan amount relative to the total amount of EIDL loans 

in industries with increases to size standards 3 ........................................... 0.5% 100.0% 1.1% 0.8% 

1Total impact represents total unique number of firms impacted to avoid double counting as some firms are participating in more than one industry. 2Additional dollars are calculated multiplying average small business dollars obligated per DUNS times change in number of firms. Numbers of 

firms are calculated using the SBA current size standard, not the contracting officer’s size designation. 3Excludes COVID–19 related EIDL loans due to their temporary nature. Effective January 1, 2022, SBA stopped accepting applications for 

new COVID EIDL loans or advances. 

The added competition from more 

businesses qualifying as small can result 

in lower prices to the Federal 

Government for procurements set-aside 

or reserved for small businesses, but 

SBA cannot quantify this impact. Costs 

could be higher when full and open 

contracts are awarded to HUBZone 

businesses that receive price evaluation 

preferences. However, with agencies 

likely setting aside more contracts for 

small businesses in response to the 

availability of a larger pool of small 

businesses under the higher size 

standards, HUBZone firms might end up 

getting more set-aside contracts and 

fewer full and open contracts, thereby 

resulting in some cost savings to 

agencies. SBA cannot estimate such 

costs savings as it is impossible to 

determine the number and value of 

unrestricted contracts to be otherwise 

awarded to HUBZone firms will be 

awarded as set-asides. However, such 

cost savings are likely to be relatively 

small as only a small fraction of full and 

open contracts are awarded to HUBZone 

businesses. 

Under SBA’s 7(a) and 504 loan 

programs, based on the data for fiscal 

years 2018–2020, SBA estimates up to 

about 20 SBA 7(a) and 504 loans 

totaling about $9.3 million could be 

made to these newly-qualified small 

businesses in those industries under the 

revised size standards. That represents a 

0.5% increase to the loan amount 

compared to the baseline (see Table 9). 

Newly-qualified small businesses will 

also benefit from the SBA’s EIDL 

program. Because the benefits provided 

through this program are contingent on 


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the occurrence and severity of a disaster 

in the future, SBA cannot make a 

meaningful estimate of this impact. 

However, based on the historical trends 

of the EIDL program data, SBA estimates 

that, on an annual basis, the newly 

defined small businesses under the 

increases of 46 size standards could 

receive three EIDL loans, totaling about 

$0.11 million. Additionally, the newlydefined small businesses would also 

benefit through reduced fees, less 

paperwork, and fewer compliance 

requirements that are available to small 

businesses through the Federal 

Government, but SBA has no data to 

quantify this impact (see Table 9) 

Costs of Increases to Size Standards 

Besides having to register in sam.gov 

to be able to participate in Federal 

contracting and update the SAM profile 

annually, small businesses incur no 

direct costs to gain or retain their small 

business status because of increases to 

size standards. All businesses willing to 

do business with the Federal 

Government must register in SAM and 

update their SAM profiles annually, 

regardless of their size status. SBA 

believes that a vast majority of 

businesses that are willing to participate 

in Federal contracting are already 

registered in SAM and update their 

SAM profiles annually. This final rule 

does not establish the new size 

standards for the very first time; rather 

it modifies the existing size standards in 

accordance with a statutory 

requirement, the latest data, and other 

relevant factors. 

To the extent that the newly qualified 

small businesses could become active in 

Federal procurement, the increases to 

size standards may entail some 

additional administrative costs to the 

Federal Government as a result of more 

businesses qualifying as small for 

Federal small business programs. For 

example, there will be more firms 

seeking SBA’s loans, more firms eligible 

for enrollment in the Dynamic Small 

Business Search (DSBS) database or in 

certify.sba.gov, more firms seeking 

certification as 8(a)/BD or HUBZone 

firms or qualifying for small business, 

SDB, WOSB, EDWOSB, and SDVOSB 

status, and more firms applying for 

SBA’s 8(a)/BD and mentor-prote ́ge ́

programs. With an expanded pool of 

small businesses, it is likely that Federal 

agencies would set-aside more contracts 

for small businesses under the adopted 

increases to size standards. One may 

surmise that this might result in a 

higher number of small business size 

protests and additional processing costs 

to agencies. However, the SBA’s 

historical data on the number size 

protests processed shows that the 

number of size protests decreased 

following the increases to receipts-based 

size standards as part of the first fiveyear review of size standards. 

Specifically, on an annual basis, the 

number of size protests fell from about 

600 during fiscal years 2011–2013 

(review of most receipts-based size 

standards was completed by the end of 

FY 2013), as compared to about 500 

during fiscal years 2018–2020 when 

increases to size standards were in 

effect. That represents a 17% decline. 

Among those newly-defined small 

businesses seeking SBA’s loans, there 

could be some additional costs 

associated with verification of their 

small business status. However, small 

business lenders have an option of using 

the tangible net worth and net incomebased alternative size standard instead 

of using the industry-based size 

standards to establish eligibility for 

SBA’s loans. For these reasons, SBA 

believes that these added administrative 

costs will be minor because necessary 

mechanisms are already in place to 

handle these added requirements. 

Additionally, some Federal contracts 

may possibly have higher costs. With a 

greater number of businesses defined as 

small due to the increases to size 

standards, Federal agencies may choose 

to set-aside more contracts for 

competition among small businesses 

only instead of using a full and open 

competition. The movement of contracts 

from unrestricted competition to small 

business set-aside contracts might result 

in competition among fewer total 

bidders, although there will be more 

small businesses eligible to submit 

offers under the higher size standards. 

However, the additional costs associated 

with fewer bidders are expected to be 

minor because, by law, procurements 

may be set-aside for small businesses 

under the 8(a)/BD, SDB, HUBZone, 

WOSB, EDWOSB, or SDVOSB programs 

only if awards are expected to be made 

at fair and reasonable prices. 

Costs may also be higher when full 

and open contracts are awarded to 

HUBZone businesses that receive price 

evaluation preferences. However, with 

agencies likely setting aside more 

contracts for small businesses in 

response to the availability of a larger 

pool of small businesses under the 

higher size standards, HUBZone firms 

might actually end up getting fewer full 

and open contracts, thereby resulting in 

some cost savings to agencies. However, 

such cost savings are likely to be 

minimal as only a small fraction of 

unrestricted contracts are awarded to 

HUBZone businesses. 

Transfer Impacts of Increasing Size 

Standards 

The increases to 46 size standards that 

are adopted in this final rule may result 

in some redistribution of Federal 

contracts between the newly-qualified 

small businesses and large businesses 

and between the newly-qualified small 

businesses and small businesses under 

the current standards. However, it 

would have no impact on the overall 

economic activity because total Federal 

contract dollars available for businesses 

to compete for will not change with 

changes to size standards. Although 

SBA cannot quantify with certainty the 

actual outcome of the gains and losses 

from the redistribution contracts among 

different groups of businesses, it can 

identify several probable impacts in 

qualitative terms. With the availability 

of a larger pool of small businesses 

under the higher size standards, some 

unrestricted Federal contracts that 

would otherwise be awarded to large 

businesses may be set-aside for small 

businesses. As a result, large businesses 

may lose some Federal contracting 

opportunities. Similarly, some small 

businesses under the current size 

standards may obtain fewer set-aside 

contracts due to the increased 

competition from larger businesses 

qualifying as small under the higher size 

standards. This impact may be offset by 

a greater number of procurements being 

set-aside for all small businesses. With 

larger businesses qualifying as small 

under the higher size standards, smaller 

small businesses could face some 

disadvantage in competing for set-aside 

contracts against their larger 

counterparts. However, SBA cannot 

quantify these impacts. 

3. What alternatives have been 

considered? 

Under OMB Circular A–4, SBA is 

required to consider regulatory 

alternatives to the changes in the final 

rule. In this section, SBA describes and 

analyzes two such alternatives.. 

Alternative Option One to the final rule, 

a more stringent alternative, would be to 

adopt size standards based solely on the 

analytical results. In other words, the 

size standards of 46 industries for which 

the analytical results suggest raising size 

standards would be raised. However, 

the size standards of 42 industries for 

which the analytical results, as 

presented in Table 4 of the November 

2020 proposed rule, suggest lowering 

them would be lowered. For the six 

remaining industries, size standards 

would be maintained at their current 

levels. Alternative Option Two would 

be to retain all size standards for all 


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industries, given the uncertainty 

generated by the ongoing COVID–19 

pandemic. Below, SBA discusses and 

presents the net impacts of each option. 

Alternative Option One: Consider 

Adopting All Calculated Size Standards 

As discussed in the Alternatives 

Considered section of this final rule, 

Alternative Option One would cause a 

substantial number of currently small 

businesses to lose their small business 

status and hence to lose their access to 

Federal small business assistance, 

especially small business set-aside 

contracts and SBA’s financial assistance 

in some cases. These consequences 

could be mitigated. For example, in 

response to the 2008 Financial Crisis 

and economic conditions that followed, 

SBA adopted a general policy in the first 

five-year comprehensive size standards 

review to not lower any size standard 

(except to exclude one or more 

dominant firms) even when the 

analytical results suggested the size 

standard should be lowered. Currently, 

because of the economic challenges 

presented by the COVID–19 pandemic 

and the measures taken to protect public 

health, SBA has decided to adopt the 

same general policy of not lowering size 

standards in the ongoing second fiveyear comprehensive size standards 

review as well. 

The primary benefit of adopting 

Alternative Option One would include: 

(1) SBA’s procurement, management, 

technical and financial assistance 

resources would be targeted to the most 

appropriate beneficiaries of such 

programs according to the analytical 

results; (2) Adopting size standards 

based on the analytical results would 

also promote consistency and 

predictability in SBA’s implementation 

of its authority to set or adjust size 

standards; and (3) Firms who would 

remain small would face less 

competition from larger small firms for 

the remaining set aside opportunities. 

Specifically, SBA sought public 

comment on the impact of adopting the 

size standards based on the analytical 

results. 

As explained in the ‘‘Size Standards 

Methodology’’ white paper, in addition 

to adopting all results of the primary 

analysis, SBA evaluates other relevant 

factors as needed such as the impact of 

the reductions in or increases to size 

standards on the distribution of 

contracts awarded to small businesses, 

and may adopt different results with the 

intention of mitigating potential 

negative impacts. 

We discussed already the benefits, 

costs, and transfer impacts of increasing 

46 size standards. Below we discuss the 

benefits, costs, and transfer impacts of 

decreasing 42 size standards. 

Benefits of Decreasing Size Standards 

Under Alternative Option One 

The most significant benefit to 

businesses from decreases to size 

standards when SBA’s analysis suggests 

such decreases is to ensure that size 

standards are more reflective of latest 

industry structure and Federal market 

trends and that Federal small business 

assistance is more effectively targeted to 

its intended beneficiaries. These include 

SBA’s business loan programs, EIDL 

program, and Federal procurement 

programs intended for small businesses. 

Federal procurement programs provide 

targeted, set-aside opportunities for 

small businesses under SBA’s business 

development programs, such as small 

business, 8(a)/BD, HUBZone, WOSB, 

EDWOSB, and SDVOSB programs. The 

adoption of calculated size standards 

diminishes the risk of awarding 

contracts to firms that are not small 

anymore. 

Decreasing size standards may reduce 

the administrative costs of the Federal 

Government, because the risk of 

awarding set-aside contracts to other 

than small businesses may diminish 

when the size standards reflect better 

the structure of the market. This may 

also diminish the risks of providing 

SBA’s loans to firms that do not need 

them the most. This may provide a 

better chance for smaller small firms to 

grow and benefit from the opportunities 

available on the Federal marketplace, 

and strengthen the small business 

industrial base for the Federal 

Government. 

Costs of Decreasing Size Standards 

Under Alternative Option One 

Table 10, Impacts of Decreasing Size 

Standards Under Alternative Option 

One, below, shows the various impacts 

of lowering size standards in 42 

industries based solely on the analytical 

results. Based on the 2012 Economic 

Census, about 1,050 (0.3%) firms would 

lose their small business status under 

this option. Similarly, based on the 

FPDS–NG data for fiscal years 2018– 

2020, about 400 (2.5%) small businesses 

participating in Federal contracting 

would lose their small status and 

become ineligible to compete for setaside contracts. 

With fewer businesses qualifying as 

small under the decreases to size 

standards, Federal agencies will have a 

smaller pool of small businesses from 

which to draw for their small business 

procurement programs. For example, 

during fiscal years 2018–2020, agencies 

awarded, on an annual basis, about 

$29.6 billion in small business contracts 

in those 42 industries for which SBA 

considered decreasing size standards. 

TABLE 10—IMPACTS OF DECREASING SIZE STANDARDS UNDER ALTERNATIVE OPTION ONE

Sector 54 Sector 55 Sector 56 Total 

No. of industries for which SBA considered decreasing size standards 

(2012 Economic Census) ............................................................................. 18 0 24 42 

Total current small businesses in industries for which SBA considered decreasing size standards (EC 2012) .............................................................. 276,751 0 125,106 401,857 

Estimated no. of firms losing small status for which SBA considered decreasing size standards (2012 Economic Census) ..................................... 676 0 375 1,051 

% of Firms losing small status relative to current small businesses in industries for which SBA considered decreasing size standards (2012 Economic Census) ............................................................................................. 0.2% 0% 0.3% 0.3% 

No. of current unique small firms getting small business contracts in industries for which SBA considered decreasing size standards (FPDS–NG FY 

2018–2020) 1 ................................................................................................ 9,334 ........................ 7,526 16,242 

Estimated number of small business firms that would have lost small business status in the decreases that SBA considered (FPDS–NG, FY2018– 

2020) 1 .......................................................................................................... 306 0 138 407 

% decrease to small business firms relative to current unique small firms 

getting small business contracts in industries for which SBA considered 

decreasing size standards (FPDS–NG FY 2018–2020) .............................. 3.3% 0.0% 1.8% 2.5% 


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TABLE 10—IMPACTS OF DECREASING SIZE STANDARDS UNDER ALTERNATIVE OPTION ONE—Continued 

Sector 54 Sector 55 Sector 56 Total 

Total small business contract dollars under current size standards in industries for which SBA considered decreasing size standards ($ million) 

(FPDS–NG FY 2018–2020) ......................................................................... $21,980 $0 $7,631 $29,611 

Estimated small business dollars not available to firms losing small business status (Using avg dollars obligated to SBs) ($ million) 2 (FPDS– 

NG FY 2018–2020) 2 .................................................................................... $1,056 $0 $216 $1,272 

% decrease to small business dollars relative to total small business contract dollars under current size standards in industries for which SBA considered decreasing size standards (FPDS–NG FY 2018–2020) ................. 4.8% 0.0% 2.8% 4.3% 

Total no. of 7(a) and 504 loans to small businesses in industries for which 

SBA considered decreasing size standards (FY 2018–2020) ..................... 2,053 ........................ 1,119 3,172 

Total amount of 7(a) and 504 loans to small businesses in industries for 

which SBA considered decreasing size standards ($ million) (FY 2018– 

2020) ............................................................................................................ $639 $0 $357 $996 

Estimated no. of 7(a) and 504 loans not available to firms that would have 

lost small business status ............................................................................ 6 0 4 10 

Estimated 7(a) and 504 loan amount not available to firms that would have 

lost small status ($ million) ........................................................................... $1.9 $0.0 $1.3 $3.1 

% decrease to 7(a) and 504 loan amount relative to the total amount of 7(a) 

and 504 loans in industries for which SBA considered decreasing size 

standards ...................................................................................................... 0.3% 0.0% 0.4% 0.3% 

Total no. of EIDL loans to small businesses in industries for which SBA 

considered decreasing size standards (FY 2018–2020) ............................. 134 0 65 199 

Total amount of EIDL loans to small businesses in industries for which SBA 

considered decreasing size standards ($ million) (FY 2018–2020) ............ $5.2 $0.0 $3.2 $8.5 

Estimated no. of EIDL loans not available to firms that would have lost 

small business status ................................................................................... 1 0 1 2 

Estimated EIDL loan amount not available to firms that would have lost 

small business status ($ million) .................................................................. $0.04 $0.00 $0.05 $0.09 

% decrease to EIDL loan amount relative to the baseline .............................. 0.7% 0.0% 1.5% 1.0% 

1Total impact represents total unique number of firms impacted to avoid double counting as some firms are participating in more than one industry. 2Additional dollars are calculated multiplying average small business dollars obligated per DUNS times change in number of firms. Numbers of 

firms are calculated using the SBA current size standard, not the contracting officer’s size designation. 3Excludes COVID–19 related EIDL loans due to their temporary nature. Effective January 1, 2022, SBA stopped accepting applications for 

new COVID EIDL loans or advances. 

As shown in Table 10, lowering size 

standards in 42 industries would reduce 

Federal contract dollars awarded to 

small businesses by $1.3 billion or about 

4.3% relative to the baseline level. 

Because of the importance of these 

sectors for the Federal procurement, 

SBA may adopt mitigating measures to 

reduce the negative impact under this 

option. SBA could adopt one or more of 

the following three actions: (1) Accept 

decreases in size standards as suggested 

by the analytical results, (2) Decrease 

size standards by a smaller amount than 

the calculated threshold, and (3) Retain 

the size standards at their current levels. 

Nevertheless, because Federal 

agencies are still required to meet the 

statutory small business contracting goal 

of 23%, actual impacts on the overall 

set-aside activity are likely to be smaller 

as agencies are likely to award more setaside contracts to small businesses that 

continue to remain small under the 

reduced size standards. 

With fewer businesses qualifying as 

small, the decreased competition can 

also result in higher prices to the 

Government for procurements set-aside 

or reserved for small businesses, but 

SBA cannot quantify this impact. 

Lowering size standards may cause 

current small business contract or 

option holders to lose their small 

business status, thereby making those 

dollars unavailable to count toward the 

agencies’ small business procurement 

goals. Additionally, impacted small 

businesses will be unable to compete for 

upcoming options as small businesses. 

As shown in Table 10, decreases to 

size standards would have a very minor 

impact on small businesses applying for 

SBA’s 7(a) and 504 loans because a vast 

majority of such loans are issued to 

businesses that are far below the 

reduced size standards. For example, 

based on the loan data for fiscal years 

2018–2020, SBA estimates that about 

ten of SBA’s 7(a) and 504 loans with 

total amounts of $3.1 million could not 

be made to those small businesses that 

would lose eligibility under the reduced 

size standards (before mitigation). That 

represents about 0.3% decrease of the 

loan amounts compared to the baseline. 

However, the actual impact could be 

much less as businesses losing small 

business eligibility under the decreases 

to industry-based size standards could 

still qualify for SBA’s loans under the 

tangible net worth and net incomebased alternative size standard. 

Businesses losing small business 

status would also be impacted by way 

of access to loans through the SBA’s 

EIDL loan program. However, SBA 

expects such impact to be minimal as 

only a small number of businesses in 

those industries received such loans 

during fiscal years 2018–2020. For 

example, based on the disaster loan data 

for fiscal years 2018–2020, SBA 

estimates that, under Alternative Option 

One, two EIDL loans with total amounts 

of $0.09 million could not be made to 

those small businesses that would lose 

eligibility under the reduced size 

standards (before mitigation). That 

represents about 1.0% decrease of the 

loan amounts compared to the baseline. 

Because this program is contingent on 

the occurrence and severity of a disaster 

in the future, SBA cannot make a more 

meaningful estimate of this impact (see 

Table 10). 

Small businesses becoming other than 

small if size standards were decreased 

might lose benefits through reduced 

fees, less paperwork, and fewer 


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compliance requirements that are 

available to small businesses through 

the Federal Government programs, but 

SBA has no data to quantify this impact. 

However, if agencies determine that 

SBA’s size standards do not adequately 

serve such purposes, they can establish 

a different size standard with an 

approval from SBA if they are required 

to use SBA’s size standards for their 

programs. 

Transfer Impacts of Decreasing Size 

Standards Under Alternative Option 

One 

If the size standards were decreased 

under Alternative Option One, it may 

result in a redistribution of Federal 

contracts between small businesses 

losing their small business status and 

large businesses and between small 

businesses losing their small business 

status and small businesses remaining 

small under the reduced size standards. 

However, as under the increases to size 

standards, it would have no impact on 

the overall economic activity because 

the total Federal contract dollars 

available for businesses to compete for 

will stay the same. Although SBA 

cannot estimate with certainty the 

actual outcome of the gains and losses 

among different groups of businesses 

from contract redistribution resulting 

from decreases to size standards, it can 

identify several probable impacts. 

With a smaller pool of small 

businesses under the decreases to size 

standards, some set-aside Federal 

contracts to be otherwise awarded to 

small businesses may be competed on 

an unrestricted basis. As a result, large 

businesses may have more Federal 

contracting opportunities. However, 

because agencies are still required by 

law to award 23% of Federal dollars to 

small businesses, SBA expects the 

movement of set-aside contracts to 

unrestricted competition to be limited. 

For the same reason, small businesses 

remaining small under the reduced size 

standards are likely to obtain more setaside contracts due to the reduced 

competition from fewer businesses 

qualifying as small under the decreases 

to size standards. With some larger 

small businesses losing small business 

status under the decreases to size 

standards, smaller small businesses 

would likely become more competitive 

in obtaining set-aside contracts. 

However, SBA cannot quantify these 

impacts. 

Net Impact of Alternative Option One 

To estimate the net impacts of 

Alternative Option One, SBA followed 

the same methodology used to evaluate 

the impacts of the increases to size 

standards (see Table 9). However, under 

Alternative Option One, SBA used the 

calculated size standards instead of the 

revised ones to determine the impacts of 

changes to current thresholds. The 

impact of the increases of size standards 

were already shown in Table 9. Table 10 

and Table 11, Net Impacts of Size 

Standards Changes under Alternative 

Option One, present the impact of the 

decreases of size standards and the net 

impact of adopting the calculated 

results under Alternative Option One, 

respectively. 

Based on the 2012 Economic Census, 

SBA estimates that in 88 industries in 

NAICS Sectors 54, 55, and 56 for which 

the analytical results suggested to 

change size standards, about 1,530 firms 

(see Table 10), would become small 

under Alternative Option One. That 

represents about 0.1% of all firms 

classified as small under the current 

size standards. That is about 1,050 fewer 

firms qualifying as small under 

Alternative Option One, which 

represents a more than 40% reduction 

from about 2,585 firms that would 

qualify as small (see Table 8) under the 

proposal being adopted in this final rule 

(i.e., increasing 46 and retaining 48 size 

standards). 

TABLE 11—NET IMPACTS OF SIZE STANDARDS CHANGES UNDER ALTERNATIVE OPTION ONE

Sector 54 Sector 55 Sector 56 Total 

No. of industries with changes to size standards ............................................ 45 2 41 88 

Total no. of small business under the current size standards (2012 Economic Census) ............................................................................................. 739,641 4,926 301,609 1,046,177 

Additional firms qualifying as small under Alternative Option One (2012 

Economic Census) ....................................................................................... 670 527 334 1,531 

% of additional firms qualifying as small relative to total current small businesses .......................................................................................................... 0.1% 10.7% 0.1% 0.1% 

No. of current unique small firms getting small business contracts (FPDS– 

NG FY 2018–2020) 1 .................................................................................... 18,820 1 10,612 27,922 

Additional small firms getting small business status (FPDS–NG FY 2018– 

2020) 1 .......................................................................................................... 16 0 ¥58 ¥75 

% increase to small firms relative to current unique small firms getting small 

business contracts (FPDS–NG FY 2018–2020) .......................................... 0.1% 0.0% -0.5% -0.3% 

Total small business small business contract dollars under current size 

standards ($ million) (FPDS–NG FY 2018–2020) ....................................... $41,089 $0 $10,675 $51,764 

Estimated small business dollars available to newly-qualified small firms ($ 

million) FPDS–NG FY 2018–2020) 2 ............................................................ -$256 $0 -$100 -$357 

% increase to dollars relative to total small business contract dollars under 

current size standards .................................................................................. ¥0.6% 0.0% ¥0.9% ¥0.7% 

Total no. of 7(a) and 504 loans to small businesses (FY 2018–2020) ........... 5,120 43 2,792 7,955 

Total amount of 7(a) and 504 loans to small businesses (FY 2018–2020) .... $1,979 $30 $871 $2,881 

Estimated no. of additional 7(a) and 504 loans to newly-qualified small firms 3 5 2 10 

Estimated additional 7(a) and 504 loan amount to newly-qualified small 

firms ($ million) ............................................................................................. $2.1 $3.5 $0.5 $6.1 

% increase to 7(a) and 504 loan amount relative to the total amount of 7(a) 

and 504 loans to small businesses ............................................................. 0.1% 11.6% 0.1% 0.2% 

Total no. of EIDL loans to small businesses (FY 2018–2020) 3 ..................... 364 1 162 527 

Total amount of EIDL loans to small businesses (FY 2018–2020) 3 .............. $16.5 $0.02 $7.3 $23.8 

Estimated no. of additional EIDL r loans to newly-qualified small firms 3 ....... 0 1 0 1 

Estimated additional EIDL r loan amount to newly-qualified small firms ($ 

million) 3 ........................................................................................................ $0.01 $0.02 $0.01 $0.02


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TABLE 11—NET IMPACTS OF SIZE STANDARDS CHANGES UNDER ALTERNATIVE OPTION ONE—Continued 

Sector 54 Sector 55 Sector 56 Total 

% increase to EIDL loan amount relative to the total amount of EIDL loans 

to small businesses 3 .................................................................................... 0.1% 100.0% 0.2% 0.2% 

1Total impact represents total unique number of firms impacted to avoid double counting as some firms are participating in more than one industry. 2Additional dollars are calculated multiplying average small business dollars obligated per DUNS times change in number of firms. Numbers of 

firms are calculated using the SBA current size standard, not the contracting officer’s size designation. 3Excludes COVID–19 related EIDL loans due to their temporary nature. Effective January 1, 2022, SBA stopped accepting applications for 

new COVID EIDL loans or advances. 

Based on the FPDS–NG data for fiscal 

years 2018–2020, SBA estimates that 

about 75 active firms in Federal 

contracting in those industries would 

lose small business status under 

Alternative Option One, most of them 

from Sector 56. This represents a 

decrease of about 0.3% of the total 

number of small businesses 

participating in Federal contracting 

under the current size standards. Based 

on the same data, SBA estimates that 

about $357.0 million of Federal 

procurement dollars would not be 

available to firms losing their small 

status. This represents a decrease of 

0.7% from the baseline. A large amount 

of the losses are accounted for by Sector 

54 (see Table 11). 

Based on the SBA’s loan data for 

fiscal years 2018–2020, the total number 

of 7(a) and 504 loans may increase by 

about ten loans, and the loan amounts 

by about $6.1 million. This represents a 

0.2% increase of the loan amounts 

relative to the baseline. 

Firms’ participation under the SBA’s 

EIDL loan program will be affected as 

well. Because the benefit provided 

through this program is contingent on 

the occurrence and severity of a disaster 

in the future, SBA cannot make a 

meaningful estimate of this impact. 

However, based on the historical trends 

of the EIDL loan data, SBA estimates 

that the total number of disaster loans 

may increase by about one loan, and the 

loan amount by about $.02 million. This 

represents a 0.2% increase of the loan 

amounts relative to the group baseline. 

Alternative Option Two: Retaining All 

Current Size Standards 

Under this option, given the current 

COVID–19 pandemic, as discussed 

elsewhere, SBA considered retaining the 

current levels of all size standards even 

though the analytical results suggested 

changing them. Under this option, as 

the current situation develops, SBA will 

be able to assess new data available on 

economic indicators, Federal 

procurement, and SBA loans as well. 

When compared to the baseline, there is 

a net impact of zero (i.e., zero benefit 

and zero cost) for retaining all size 

standards. However, this option would 

cause otherwise qualified small 

businesses to forgo various small 

business benefits (e.g., access to setaside contracts and capital) that become 

available to them under the option of 

increasing 46 and retaining 48 size 

standards adopted in this final rule. 

Moreover, retaining all size standards 

under Alternative Option Two would 

also be contrary to the SBA’s statutory 

mandate to review and adjust, every five 

years, all size standards to reflect 

current industry and Federal market 

conditions. Retaining all size standards 

without required periodic adjustments 

would increasingly exclude otherwise 

eligible small businesses from small 

business benefits. 

Congressional Review Act 

Subtitle E of the Small Business 

Regulatory Enforcement Fairness Act of 

1996 (codified at 5 U.S.C. 801–808), also 

known as the Congressional Review Act 

or CRA, generally provides that before a 

rule may take effect, the agency 

promulgating the rule must submit a 

rule report, which includes a copy of 

the rule, to each House of the Congress 

and to the Comptroller General of the 

United States. SBA will submit a report 

containing this rule and other required 

information to the U.S. Senate, the U.S. 

House of Representatives, and the 

Comptroller General of the United 

States. A major rule under the CRA 

cannot take effect until 60 days after it 

is published in the Federal Register. 

OMB’s Office of Information and 

Regulatory Affairs has determined that 

this rule is not a ‘‘major rule’’ as defined 

by 5 U.S.C. 804(2). 

Final Regulatory Flexibility Analysis 

According to the Regulatory 

Flexibility Act (RFA), 5 U.S.C. 601–612, 

when an agency issues a rulemaking, it 

must prepare a regulatory flexibility 

analysis to address the impact of the 

rule on small entities. This final rule, if 

adopted, may have a significant impact 

on a substantial number of small 

businesses in the industries covered by 

this final rule. As described above, this 

final rule may affect small businesses 

seeking Federal contracts, loans under 

SBA’s 7(a), 504 and Disaster Loan 

programs, and assistance under other 

Federal small business programs. 

Immediately below, SBA sets forth a 

final regulatory flexibility analysis 

(FRFA) 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 businesses 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 that may duplicate, 

overlap, or conflict with the rule? (5) 

What alternatives will allow SBA to 

accomplish its regulatory objectives 

while minimizing the impact on small 

businesses? 

1. What is the need for and objective of 

the rule? 

Changes in industry structure, 

technological changes, productivity 

growth, mergers and acquisitions, and 

updated industry definitions have 

changed the structure of many the 

industries covered by this final rule. 

Such changes can be enough to support 

revisions to current size standards for 

some industries. Based on the analysis 

of the latest data available, SBA believes 

that the size standards adopted in this 

final rule more appropriately reflect the 

size of businesses that need Federal 

assistance. The 2010 Jobs Act also 

requires SBA to review all size 

standards and make necessary 

adjustments to reflect market 

conditions. 

2. What is SBA’s description and 

estimate of the number of small 

businesses to which the rule will apply? 

Based on data from the 2012 

Economic Census, SBA estimates that 

there are about 1.05 million small firms 

covered by this rulemaking under 

industries with increases to size 

standards. As a result of this final rule, 

SBA estimates that an additional 1,530 

businesses will be defined as small 

under the revised size standards. 


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3. What are the projected reporting, 

record keeping and other compliance 

requirements of the rule? 

The size standard changes in this final 

rule impose no additional reporting or 

record keeping requirements on small 

businesses. However, qualifying for 

Federal procurement and a number of 

other programs requires that businesses 

register in SAM and self-certify that 

they are small at least once annually 

(FAR 52.204–13). For existing contracts, 

small business contractors are required 

to update their SAM registration as 

necessary, to ensure that they reflect the 

Contractor’s current status (FAR 52.219– 

28). Businesses are also required to 

verify that their SAM registration is 

current, accurate, and complete with the 

submission of an offer for every new 

contract (FAR 52.204–7 and 52.204–8). 

Therefore, businesses opting to 

participate in those programs must 

comply with SAM requirements. 

Changes in small business size 

standards do not result in additional 

costs associated with SAM registration 

or certification. Changing size standards 

alters the access to SBA’s programs that 

assist small businesses but does not 

impose a regulatory burden because 

they neither regulate nor control 

business behavior. 

4. What are the relevant Federal rules 

that may duplicate, overlap, or conflict 

with the rule? 

Under section 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 

to do otherwise. 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 

(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)). 

5. What alternatives will allow SBA 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 

practical alternative exists to the 

systems of numerical size standards. 

However, SBA considered two 

alternatives to increasing 46 and 

maintaining 48 size standards at their 

current levels. The first alternative SBA 

considered was adopting size standards 

based solely on the analytical results. In 

other words, the size standards of 46 

industries for which the analytical 

results suggest raising them would be 

raised. However, the size standards of 

42 industries for which the analytical 

results suggest lowering size standards 

would be lowered. This would cause a 

significant number of small businesses 

to lose their small business status, 

particularly in sectors 54 and 56 (see 

Table 9). Under the second alternative, 

in view of the COVID–19 pandemic, 

SBA considered retaining all size 

standards at the current levels, even 

though the analytical results may 

suggest increasing 46 and decreasing 42 

size standards. Retaining all size 

standards at their current levels would 

be more onerous for small businesses 

than the option of increasing 46 and 

retaining the remaining 48 size 

standards. Postponing the adoption of 

the higher calculated size standards 

would be detrimental for otherwise 

small businesses within those industries 

in terms of access to various small 

business benefits, including access to 

set-aside contracts and capital through 

SBA contracting and financial programs, 

and exemptions from paperwork and 

other compliance requirements. 

Executive Order 13563 

Executive Order 13563 emphasizes 

the importance of quantifying both costs 

and benefits, reducing costs, 

harmonizing rules, and promoting 

flexibility. A description of the need for 

this regulatory action and benefits and 

costs associated with this action, 

including possible distributional 

impacts that relate to Executive Order 

13563, is included above in the 

Regulatory Impact Analysis under 

Executive Order 12866. Additionally, 

Executive Order 13563, section 6, calls 

for retrospective analyses of existing 

rules. 

The review of size standards in the 

industries covered by this final rule is 

consistent with section 6 of Executive 

Order 13563 and the 2010 Jobs Act, 

which requires SBA to review all size 

standards and make necessary 

adjustments to reflect market 

conditions. Specifically, the 2010 Jobs 

Act requires SBA to review at least onethird of all size standards during every 

18-month period from the date of its 

enactment (September 27, 2010) and to 

review all size standards not less 

frequently than once every 5 years, 

thereafter. SBA had already launched a 

comprehensive review of size standards 

in 2007. In accordance with the Jobs 

Act, SBA completed the comprehensive 

review of the small business size 

standard for each industry, except those 

for agricultural enterprises previously 

set by Congress, and made appropriate 

adjustments to size standards for several 

industries to reflect current Federal and 

industry market conditions. The first 

comprehensive review was completed 

in early 2016. Prior to 2007, the last 

time SBA conducted a comprehensive 

review of all size standards was during 

the late 1970s and early 1980s. 

SBA issued a white paper entitled 

‘‘Size Standards Methodology’’ and 

published a notice in the April 11, 2019, 

edition of the Federal Register (84 FR 

14587) to advise the public that the 

document is available for public review 

and comments. The ‘‘Size Standards 

Methodology’’ white paper explains 

how SBA establishes, reviews, and 

modifies its receipts-based and 

employee-based small business size 

standards. SBA considered all input, 

suggestions, recommendations, and 

relevant information obtained from 

industry groups, individual businesses, 

and Federal agencies in developing size 

standards for those industries covered 

by this final rule. SBA received a total 

of 93 comments to the proposed rule 

from a wide range of entities including 

individuals, corporations, trade 

associations and an academic 

institution. In the Summary of 

Comments section of this final rule, 

SBA summarizes and provides 

responses to the comments received on 

the proposed rule. 

Executive Order 12988 

This action meets applicable 

standards set forth in sections 3(a) and 

3(b)(2) of Executive Order 12988, Civil 

Justice Reform, to minimize litigation, 

eliminate ambiguity, and reduce 

burden. The action does not have 

retroactive or preemptive effect. 

Executive Order 13132 

For purposes of Executive Order 

13132, SBA has determined that this 

final rule will not have substantial, 


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direct effects on the States, on the 

relationship between the Federal 

Government and the States, or on the 

distribution of power and 

responsibilities among the various 

levels of Government. Therefore, SBA 

has determined that this final rule has 

no federalism implications warranting 

preparation of a federalism assessment. 

Paperwork Reduction Act 

For the purpose of the Paperwork 

Reduction Act, 44 U.S.C. Ch. 35, SBA 

has determined that this final rule will 

not impose any new reporting or record 

keeping requirements. 

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. 

For the reasons set forth in the 

preamble, SBA amends 13 CFR part 121 

as follows: 

PART 121—SMALL BUSINESS SIZE 

REGULATIONS 

■ 1. The authority citation for part 121 

continues to read as follows: 

Authority: 15 U.S.C. 632, 634(b)(6), 

636(a)(36), 662, and 694a(9); Pub. L. 116–136, 

Section 1114. 

■ 2. In § 121.201, amend the table by 

revising the entries for ‘‘541110,’’ 

‘‘541191,’’ ‘‘541199,’’ ‘‘541211,’’ 

‘‘541214,’’ ‘‘541310,’’ ‘‘541330,’’ 

‘‘541330 (Exception 1),’’ ‘‘541330 

(Exception 2),’’ ‘‘541330 (Exception 3),’’ 

‘‘541350,’’ ‘‘541360,’’ ‘‘541420,’’ 

‘‘541490,’’ ‘‘541513,’’ ‘‘541611,’’ 

‘‘541612,’’ ‘‘541614,’’ ‘‘541720,’’ 

‘‘541810,’’ ‘‘541830,’’ ‘‘541840,’’ 

‘‘541850,’’ ‘‘541860,’’ ‘‘541870,’’ 

‘‘541910,’’ ‘‘541921,’’ ‘‘541930,’’ 

‘‘541940,’’ ‘‘541990,’’ ‘‘551111,’’ 

551112,’’ the Sector 56 heading, and the 

entries for ‘‘561110,’’ ‘‘561330,’’ 

‘‘561422,’’ ‘‘561439,’’ ‘‘561440,’’ 

‘‘561450,’’ ‘‘561499,’’ ‘‘561599,’’ 

‘‘561612,’’ ‘‘561613,’’ ‘‘561710,’’ 

‘‘561730,’’ ‘‘561740,’’ ‘‘561910,’’ 

‘‘561920,’’ ‘‘561990,’’ and ‘‘562998’’ to 

read as follows: 

§ 121.201 What size standards has SBA 

identified by North American Industry 

Classification System codes? 

* * * * * 

SMALL BUSINESS SIZE STANDARDS BY NAICS INDUSTRY

NAICS 

codes NAICS U.S. industry title 

Size standards 

in millions of 

dollars 

Size standards 

in number of 

employees 

*******

Sector 54—Professional, Scientific and Technical Services 

Subsector 541—Professional, Scientific and Technical Services 

541110 ................................ Offices of Lawyers .......................................................................................... $13.5 ............................

541191 ................................ Title Abstract and Settlement Offices ............................................................. 17.0 ............................

541199 ................................ All Other Legal Services ................................................................................. 18.0 ............................

541211 ................................ Offices of Certified Public Accountants .......................................................... 23.5 ............................

* * * * * * * 

541214 ................................ Payroll Services .............................................................................................. 34.5 ............................

* * * * * * * 

541310 ................................ Architectural Services ..................................................................................... 11.0 ............................

* * * * * * * 

541330 ................................ Engineering Services ...................................................................................... 22.5 ............................

541330 (Exception 1) ......... Military and Aerospace Equipment and Military Weapons ............................ 41.50 ............................

541330 (Exception 2) ......... Contracts and Subcontracts for Engineering Services Awarded Under the 

National Energy Policy Act of 1992.

41.50 ............................

541330 (Exception 3) ......... Marine Engineering and Naval Architecture .................................................. 41.50 ............................

* * * * * * * 

541350 ................................ Building Inspection Services .......................................................................... 10.0 ............................

541360 ................................ Geophysical Surveying and Mapping Services .............................................. 25.0 ............................

* * * * * * * 

541420 ................................ Industrial Design Services .............................................................................. 15.0 ............................

* * * * * * * 

541490 ................................ Other Specialized Design Services ................................................................ 12.0 ............................

* * * * * * * 

541513 ................................ Computer Facilities Management Services .................................................... 32.5 ............................

* * * * * * * 

541611 ................................ Administrative Management and General Management Consulting Services 21.5 ............................

541612 ................................ Human Resources Consulting Services ......................................................... 25.5 ............................

* * * * * * * 

541614 ................................ Process, Physical Distribution, and Logistics Consulting Services ............... 17.5 ............................

* * * * * * * 

541720 ................................ Research and Development in the Social Sciences and Humanities ........... 24.5 ............................


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Federal Register / Vol. 87, No. 62 / Thursday, March 31, 2022 / Rules and Regulations 18693 

SMALL BUSINESS SIZE STANDARDS BY NAICS INDUSTRY—Continued 

NAICS 

codes NAICS U.S. industry title 

Size standards 

in millions of 

dollars 

Size standards 

in number of 

employees 

541810 ................................ Advertising Agencies 10 .................................................................................. 10 22.5 ............................

* * * * * * * 

541830 ................................ Media Buying Agencies .................................................................................. 28.5 ............................

541840 ................................ Media Representatives ................................................................................... 18.5 ............................

541850 ................................ Outdoor Advertising ........................................................................................ 30.5 ............................

541860 ................................ Direct Mail Advertising .................................................................................... 19.5 ............................

541870 ................................ Advertising Material Distribution Services ...................................................... 25.0 ............................

* * * * * * * 

541910 ................................ Marketing Research and Public Opinion Polling ............................................ 20.0 ............................

541921 ................................ Photography Studios, Portrait ........................................................................ 14.0 ............................

* * * * * * * 

541930 ................................ Translation and Interpretation Services ......................................................... 20.0 ............................

541940 ................................ Veterinary Services ........................................................................................ 9.0 ............................

541990 ................................ All Other Professional, Scientific and Technical Services ............................. 17.0 ............................

Sector 55—Management of Companies and Enterprises 

Subsector 551—Management of Companies and Enterprises 

551111 ................................ Offices of Bank Holding Companies .............................................................. 34.0 ............................

551112 ................................ Offices of Other Holding Companies ............................................................. 40.0 ............................

Sector 56—Administrative and Support and Waste Management and Remediation Services 

Subsector 561—Administrative and Support Services 

561110 ................................ Office Administrative Services ........................................................................ 11.0 ............................

* * * * * * * 

561330 ................................ Professional Employer Organizations ............................................................ 36.5 ............................

* * * * * * * 

561422 ................................ Telemarketing Bureaus and Other Contact Centers ...................................... 22.5 ............................

* * * * * * * 

561439 ................................ Other Business Service Centers (including Copy Shops) ............................. 23.5 ............................

561440 ................................ Collection Agencies ........................................................................................ 17.0 ............................

561450 ................................ Credit Bureaus ................................................................................................ 36.0 ............................

* * * * * * * 

561499 ................................ All Other Business Support Services ............................................................. 19.0 ............................

* * * * * * * 

561599 ................................ All Other Travel Arrangement and Reservation Services .............................. 28.5 ............................

* * * * * * * 

561612 ................................ Security Guards and Patrol Services ............................................................. 25.5 ............................

561613 ................................ Armored Car Services .................................................................................... 38.0 ............................

* * * * * * * 

561710 ................................ Exterminating and Pest Control Services ...................................................... 15.5 ............................

* * * * * * * 

561730 ................................ Landscaping Services .................................................................................... 8.5 ............................

561740 ................................ Carpet and Upholstery Cleaning Services ..................................................... 7.5 ............................

* * * * * * * 

561910 ................................ Packaging and Labeling Services .................................................................. 17.0 ............................

561920 ................................ Convention and Trade Show Organizers 10 ................................................... 10 17.5 ............................

561990 ................................ All Other Support Services ............................................................................. 14.5 ............................

Subsector 562—Waste Management and Remediation Services 

*******

562998 ................................ All Other Miscellaneous Waste Management Services ................................. 14.5 ............................

*******

Footnotes 


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18694 Federal Register / Vol. 87, No. 62 / Thursday, March 31, 2022 / Rules and Regulations 

******* 10 NAICS codes 488510 (excluding the exception), 531210, 541810, 561510, 561520 and 561920—As measured by total revenues, but excluding funds received in trust for an unaffiliated third party, such as bookings or sales subject to commissions. The commissions received are 

included as revenue. 

* * * * * * * 

Isabella Casillas Guzman, 

Administrator. 

[FR Doc. 2022–06611 Filed 3–30–22; 8:45 am] 

BILLING CODE 8026–03–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2022–0024; Project 

Identifier MCAI–2021–00994–R; Amendment 

39–21999; AD 2022–07–11] 

RIN 2120–AA64 

Airworthiness Directives; Leonardo 

S.p.a. Helicopters 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Final rule. 

SUMMARY: The FAA is superseding 

Airworthiness Directive (AD) 2021–17– 

18, which applied to all Leonardo S.p.a. 

Model A109C, A109K2, A109E, A109S, 

and AW109SP helicopters. AD 2021– 

17–18 required an inspection of certain 

tail rotor (TR) sleeve assemblies for 

discrepancies, an inspection of certain 

TR shaft assemblies for discrepancies, a 

repetitive measurement of the position 

of the bushing of the TR sleeve assembly 

in relation to the pitch change slider 

assembly, and corrective actions if 

necessary. This AD retains the 

requirements of AD 2021–17–18, and 

also requires repetitive inspections of 

the TR sleeve assemblies, and corrective 

actions if necessary, as specified in a 

European Union Aviation Safety Agency 

(EASA) AD, which is incorporated by 

reference. This AD was prompted by a 

determination that additional actions 

are required to address the unsafe 

condition. This AD was also prompted 

by a report of a crack on the TR mast. 

The FAA is issuing this AD to address 

the unsafe condition on these products. 

DATES: This AD is effective May 5, 2022. 

The Director of the Federal Register 

approved the incorporation by reference 

of a certain publication listed in this AD 

as of September 7, 2021 (86 FR 46766, 

August 20, 2021). 

ADDRESSES: For material incorporated 

by reference (IBR) in this AD, contact 

the EASA, Konrad-Adenauer-Ufer 3, 

50668 Cologne, Germany; phone: +49 

221 8999 000; email: ADs@

easa.europa.eu; internet: 

www.easa.europa.eu. You may find this 

material on the EASA website at https:// 

ad.easa.europa.eu. You may view this 

material at the FAA, Office of the 

Regional Counsel, Southwest Region, 

10101 Hillwood Pkwy., Room 6N–321, 

Fort Worth, TX 76177. For information 

on the availability of this material at the 

FAA, call 817–222–5110. It is also 

available in the AD docket on the 

internet at https://www.regulations.gov 

by searching for and locating Docket No. 

FAA–2022–0024. 

Examining the AD Docket 

You may examine the AD docket on 

the internet at https://

www.regulations.gov by searching for 

and locating Docket No. FAA–2022– 

0024; or in person at Docket Operations 

between 9 a.m. and 5 p.m., Monday 

through Friday, except Federal holidays. 

The AD docket contains this final rule, 

any comments received, and other 

information. The address for Docket 

Operations is U.S. Department of 

Transportation, Docket Operations, M– 

30, West Building Ground Floor, Room 

W12–140, 1200 New Jersey Avenue SE, 

Washington, DC 20590. 

FOR FURTHER INFORMATION CONTACT: 

Andrea Jimenez, Aerospace Engineer, 

COS Program Management Section, 

Operational Safety Branch, FAA, 1600 

Stewart Ave., Suite 410, Westbury, NY 

11590; phone: (516) 228–7330; email: 

andrea.jimenez@faa.gov. 

SUPPLEMENTARY INFORMATION: 

Background 

The EASA, which is the Technical 

Agent for the Member States of the 

European Union, has issued EASA AD 

2021–0144, dated June 17, 2021 (EASA 

AD 2021–0144). (also referred to as the 

Mandatory Continuing Airworthiness 

Information, or the MCAI), to correct an 

unsafe condition for all Leonardo S.p.a. 

(formerly Finmeccanica S.p.A, 

AgustaWestland S.p.A., Agusta S.p.A.) 

Model A109C, A109K2, A109E, A109S, 

and AW109SP helicopters. 

The FAA issued a notice of proposed 

rulemaking (NPRM) to amend 14 CFR 

part 39 to supersede AD 2021–17–18, 

Amendment 39–21701 (86 FR 46766, 

August 20, 2021) (AD 2021–17–18). AD 

2021–17–18 applied to all Leonardo 

S.p.a. Model A109C, A109K2, A109E, 

A109S, and AW109SP helicopters. The 

NPRM published in the Federal 

Register on February 3, 2022 (87 FR 

6091). The NPRM was prompted by a 

determination that additional actions 

are required to address the unsafe 

condition. The NPRM was also 

prompted by a report of a crack on the 

TR mast. The NPRM proposed to 

continue to require an inspection of 

certain TR sleeve assemblies for 

discrepancies, an inspection of certain 

TR shaft assemblies for discrepancies, a 

repetitive measurement of the position 

of the bushing of the TR sleeve assembly 

in relation to the pitch change slider 

assembly, and corrective actions if 

necessary, as specified in an EASA AD. 

The NPRM also proposed to require 

repetitive inspections of the TR sleeve 

assemblies, and corrective actions if 

necessary, as specified in an EASA AD. 

The FAA is issuing this AD to address 

cracking on the TR mast, which could 

lead to failure of the TR mast, with 

consequent loss of control of the 

helicopter. See the MCAI for additional 

background information. 

Discussion of Final Airworthiness 

Directive 

Comments 

The FAA gave the public the 

opportunity to participate in developing 

this final rule. The FAA received no 

comments on the NPRM or on the 

determination of the cost to the public. 

Conclusion 

The FAA reviewed the relevant data 

and determined that air safety and the 

public interest require adopting this 

final rule as proposed, except for minor 

editorial changes. The FAA has 

determined that these minor changes: 

• Are consistent with the intent that 

was proposed in the NPRM for 

addressing the unsafe condition; and 

• Do not add any additional burden 

upon the public than was already 

proposed in the NPRM. 

Related Service Information Under 1 

CFR Part 51 

This AD requires EASA AD 2021– 

0144, which the Director of the Federal 

Register approved for incorporation by 

reference as of September 7, 2021 (86 FR 

46766, August 20, 2021). This material 

is reasonably available because the 

interested parties have access to it 

through their normal course of business 

or by the means identified in the 

ADDRESSES section. 


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