24752 Federal Register / Vol. 87, No. 80 / Tuesday, April 26, 2022 / Proposed Rules 

SMALL BUSINESS ADMINISTRATION 

13 CFR Part 121 

RIN 3245–AH09 

Small Business Size Standards: 

Manufacturing and Industries With 

Employee-Based Size Standards in 

Other Sectors Except Wholesale Trade 

and Retail Trade 

AGENCY: U.S. Small Business 

Administration. 

ACTION: Proposed rule. 

SUMMARY: The U.S. Small Business 

Administration (SBA or the Agency) has 

reviewed its employee-based small 

business size definitions (commonly 

referred to as ‘‘size standards’’) for 

North American Industry Classification 

System (NAICS) sectors related to 

Mining, Quarrying, and Oil and Gas 

Extraction (Sector 21); Utilities (Sector 

22); Manufacturing (Sector 31–33); 

Transportation and Warehousing (Sector 

48–49); Information (Section 51); 

Finance and Insurance (Sector 52); 

Professional, Scientific and Technical 

Services (Sector 54); and Administrative 

and Support, Waste Management and 

Remediation Services (Sector 56) and 

proposes several changes. Specifically, 

SBA proposes to increase 150 and retain 

282 employee-based size standards in 

those sectors. SBA also proposes to 

retain the current 500-employee size 

standard for Federal procurement of 

supplies under the nonmanufacturer 

rule. SBA’s proposed revisions relied on 

its ‘‘Size Standards Methodology’’ 

(Methodology). SBA seeks comments on 

its proposed changes to size standards 

in the above sectors and the data 

sources it evaluated to develop the 

proposed size standards. 

DATES: SBA must receive comments to 

this proposed rule on or before June 27, 

2022. 

ADDRESSES: Identify your comments by 

RIN 3245–AH09 and submit them by 

one of the following methods: (1) 

Federal eRulemaking Portal: 

www.regulations.gov. Follow the 

instructions for submitting comments; 

or (2) Mail/Hand Delivery/Courier: 

Khem R. Sharma, Ph.D., Chief, Office of 

Size Standards, 409 Third Street SW, 

Mail Code 6530, Washington, DC 20416. 

SBA will post all comments to this 

proposed rule on www.regulations.gov. 

If you wish to submit confidential 

business information (CBI) as defined in 

the User Notice at www.regulations.gov, 

you must submit such information to 

U.S. Small Business Administration, 

Khem R. Sharma, Ph.D., Chief, Office of 

Size Standards, 409 Third Street SW, 

Mail Code 6530, Washington, DC 20416, 

or send an email to sizestandards@

sba.gov. Highlight the information that 

you consider to be CBI and explain why 

you believe SBA should hold this 

information as confidential. SBA will 

review your information and determine 

whether it will make the information 

public. 

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 (CDC/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. 

During the first five-year 

comprehensive size standards review, 

SBA reviewed the employee-based size 

standards for 25 industries within 

NAICS Sector 21 (Mining, Quarrying, 

and Oil and Gas Extraction), 364 

industries within NAICS Sector 31–33 

(Manufacturing), 15 industries within 

Sector 48–49 (Transportation and 

Warehousing), 12 industries within 

NAICS Sector 51 (Information), 2 

industries and 4 subindustries (or 

‘‘exceptions’’) within NAICS Sector 54 

(Professional, Scientific and Technical 

Services), and 4 industries or 

subindustries (‘‘exceptions’’) with 

employee-based size standards in other 

sectors covered by this proposed rule. 

These reviews of employee-based size 

standards occurred during September 

2014 to January 2016. Based on analyses 

of the relevant industry and Federal 

contracting data available at that time, 

SBA increased 15 and decreased 3 

employee-based size standards in Sector 

21, increased 4 in Sector 48–49, 8 in 

Sector 51, 3 in Sector 54, and 2 in other 

sectors (81 FR 4435 (January 26, 2016)). 

SBA also increased 209 size standards 

in Sector 31–33 (81 FR 4469 (January 

26, 2016)). Table 1, Size Standards 

Revisions During the First 5-Year 

Review, provides a summary of these 

revisions by NAICS sector. 

TABLE 1—SIZE STANDARDS REVISIONS DURING THE FIRST 5-YEAR REVIEW

Sector Sector name 

Number of size 

standards 

reviewed 

Number of size 

standards 

increased 

Number of size 

standards 

decreased 

Number of size 

standards 

maintained 

21 ................... Mining, Quarrying, and Oil and Gas Extraction .. 25 15 3 7 

31–33 ............. Manufacturing ...................................................... 364 209 0 155 

48–49 ............. Transportation and Warehousing ........................ 15 4 0 11 

51 ................... Information ........................................................... 12 8 0 4 

54 ................... Professional, Scientific and Technical Services .. 6 5 0 1 


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1On December 21, 2021, 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. 

TABLE 1—SIZE STANDARDS REVISIONS DURING THE FIRST 5-YEAR REVIEW—Continued 

Sector Sector name 

Number of size 

standards 

reviewed 

Number of size 

standards 

increased 

Number of size 

standards 

decreased 

Number of size 

standards 

maintained 

Others ............ Agriculture, Forestry, Fishing and Hunting (Sector 11); Utilities (Sector 22); Finance and Insurance (Sector 52); Administrative and Support, Waste Management and Remediation 

Services (Sector 56).

4 2 0 2 

Total ........ .............................................................................. 426 243 3 180 

Currently, there are 27 different size 

standards levels covering 1,023 NAICS 

industries and 14 subindustry activities 

(commonly known as ‘‘exceptions’’ in 

SBA’s Table of Size Standards). Of these 

27 size levels, 16 are based on average 

annual receipts, 9 are based on average 

number of employees, and 2 are based 

on other measures. 

SBA also adjusts its monetary-based 

size standards for inflation at least once 

every 5 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) latest NAICS 

revisions to its Table of Size Standards. 

Effective October 1, 2017, SBA adopted 

OMB’s 2017 NAICS revisions to its size 

standards (82 FR 44886, September 27, 

2017).1

This proposed rule is the last of a 

series of proposed rules that is 

reviewing size standards of industries 

grouped by various NAICS sectors. 

Rather than review all size standards at 

one time, SBA reviewed size standards 

by grouping industries within various 

NAICS sectors that use the same size 

measure (i.e., employees or receipts). In 

the current review, SBA reviewed size 

standards in six groups of NAICS 

sectors. (In the prior review, SBA 

reviewed size standards mostly on a 

sector-by-sector basis.) Once SBA 

completed its review of size standards 

for a group of sectors, it issued for 

public comments a proposed rule to 

revise size standards for those industries 

based on the latest available data and 

other factors deemed relevant by the 

SBA Administrator. 

Below is a discussion of SBA’s ‘‘Size 

Standards Methodology’’ 

(Methodology), issued on April 11, 

2019, and available at www.sba.gov/size, 

for establishing, reviewing, or modifying 

employee-based size standards that SBA 

has applied to this proposed rule. SBA 

examines the structural characteristics 

of an industry as a basis to assess 

industry differences and the overall 

degree of competitiveness of an industry 

and of firms within the industry. 

Industry structure is typically examined 

by analyzing four primary factors— 

average firm size, degree of competition 

within an industry, start-up costs and 

entry barriers, and distribution of firms 

by size. To assess the ability of small 

businesses to compete for Federal 

contracting opportunities under the 

current size standards, as the fifth 

primary factor, SBA also examines, for 

each industry averaging $20 million or 

more in average annual Federal contract 

dollars, the small business share in 

Federal contract dollars relative to the 

small business share in total industry’s 

receipts. When necessary, SBA also 

considers other secondary factors that 

are relevant to the industries and the 

interests of small businesses, including 

impacts of size standards changes on 

small businesses. 

Size Standards Methodology 

SBA has revised its Methodology for 

establishing, reviewing, or modifying 

size standards on April 11, 2019 (84 FR 

14587). The Methodology is available on 

SBA’s size standards web page at 

www.sba.gov/size. 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 Methodology. For a 

summary of comments and SBA’s 

responses, refer to the SBA’s April 11, 

2019, Federal Register notification cited 

above. 

The Methodology represents a major 

change from the previous Methodology 

issued on October 21, 2009 (74 FR 

53940). Specifically, SBA is replacing 

the ‘‘anchor’’ approach applied in the 

previous methodology with a 

‘‘percentile’’ approach for evaluating 

differences in characteristics among 

various industries. Under the ‘‘anchor’’ 

approach, SBA generally evaluated the 

characteristics of individual industries 

relative to the average characteristics of 

industries with the anchor size standard 

to determine whether they should have 

a higher or a lower size standard than 

the anchor. In the ‘‘percentile’’ approach 

used in 2019’s methodology, SBA ranks 

industries with the same measure of size 

standards (such as receipts or 

employees) in terms of four primary 

industry factors, discussed in the 

Industry Analysis subsection below. 

The ‘‘percentile’’ approach is explained 

more fully elsewhere in this proposed 

rule. For a more detailed explanation, 

please see the revised Methodology at 

www.sba.gov/size. 

Additionally, as the fifth factor, SBA 

evaluates the difference between the 

small business share in Federal contract 

dollars and the small business share in 

total industry’s receipts to compute the 

size standard for the Federal contracting 

factor. The overall size standard for an 

industry is then obtained by averaging 

all size standards supported by each 

primary factor. The evaluation of the 

Federal contracting factor is explained 

more fully in the Industry Analysis 

section, below, in this proposed rule. 

SBA does not apply all aspects of its 

Methodology to all proposed rules 

because not all features are relevant for 

every industry covered by each 

proposed rule. For example, since all 

industries covered by this proposed rule 

have employee-based size standards, the 

methodology described in this proposed 

rule applies only to establishing, 

reviewing, or modifying employeebased size standards. 

Industry Analysis 

Congress granted the SBA 

Administrator discretion to establish 


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detailed small business size standards. 

15 U.S.C. 632(a)(2). Specifically, section 

3(a)(3) of the Small Business Act (15 

U.S.C. 632(a)(3)) requires that ‘‘. . . the 

[SBA] Administrator shall ensure that 

the size standard varies from industry to 

industry to the extent necessary to 

reflect the differing characteristics of the 

various industries and consider other 

factors deemed to be relevant by the 

Administrator.’’ Accordingly, the 

economic structure of an industry is the 

basis for establishing, reviewing, or 

modifying small business size 

standards. In addition, SBA considers 

current economic conditions, its 

mission and program objectives, the 

Administration’s current policies, 

impacts on small businesses under 

current size and proposed or revised 

size standards, suggestions from 

industry groups and Federal agencies, 

and public comments on the proposed 

rule. SBA also examines whether a size 

standard based on industry and other 

relevant data successfully excludes 

businesses that are dominant in the 

industry. 

The goal of SBA’s size standards 

review is to determine whether its 

existing small business size standards 

reflect the current industry structure 

and Federal market conditions and 

revise them when the latest available 

data suggests that revisions are 

warranted. In the past, SBA compared 

the characteristics of each industry with 

the average characteristics of a group of 

industries associated with the ‘‘anchor’’ 

size standard. For example, in the first 

five-year comprehensive review of size 

standards under the Jobs Act, $7 million 

(now $8.0 million due to the inflation 

adjustment in 2019; see 84 FR 34261 

(July 18, 2019)) was considered the 

‘‘anchor’’ for receipts-based size 

standards and 500 employees was the 

‘‘anchor’’ for employee-based size 

standards. If the characteristics of a 

specific industry under review were 

similar to the average characteristics of 

industries in the anchor group, SBA 

generally adopted the anchor size 

standard for that industry. If the specific 

industry’s characteristics were 

significantly different from those in the 

anchor group, SBA assigned a size 

standard that was higher or lower than 

the anchor. To determine a size 

standard above or below the anchor size 

standard, SBA evaluated the 

characteristics of a second comparison 

group of industries with higher size 

standards. For industries with receiptsbased standards, the second comparison 

group consisted of industries with size 

standards between $23 million and 

$35.5 million, with the weighted 

average size standard for the group 

equaling $29 million. For manufacturing 

and other industries with employeebased size standards (except for 

Wholesale Trade and Retail Trade), the 

second comparison group included 

industries with a size standard of 1,000 

employees or 1,500 employees, with the 

weighted average size standard of 1,323 

employees. Using the anchor size 

standard and average size standard for 

the second comparison group, SBA 

computed a size standard for an 

industry’s characteristic (factor) based 

on the industry’s position for that factor 

relative to the average values of the 

same factor for industries in the anchor 

and second comparison groups. 

Under the ‘‘percentile’’ approach, for 

each industry factor, an industry is 

ranked and compared with the 20th 

percentile and 80th percentile values of 

that factor among the industries sharing 

the same measure of size standards (i.e., 

receipts or employees). Combining that 

result with the 20th percentile and 80th 

percentile values of size standards 

among the industries with the same 

measure of size standards, SBA 

computes a size standard supported by 

each industry factor for each industry. 

In the previous methodology, 

comparison industry groups were 

predetermined independent of the data, 

while in the revised Methodology they 

are established using the actual industry 

data from the Economic Census 

tabulation. 

The primary factors that SBA 

evaluates to examine industry structure 

include average firm size, startup costs 

and entry barriers, industry 

competition, and distribution of firms 

by size. SBA also evaluates, as an 

additional primary factor, small 

business success in receiving Federal 

contracts under the current size 

standards. Specifically, for the Federal 

contracting factor, SBA examines the 

small business share of Federal contract 

dollars relative to small business share 

of total receipts within an industry. 

These are, generally, five important 

factors (listed below) that SBA examines 

when establishing, reviewing, or 

revising a size standard for an industry. 

However, SBA will also consider and 

evaluate other secondary factors that it 

believes are relevant to a particular 

industry (such as technological changes, 

growth trends, SBA financial assistance, 

and other program factors). SBA also 

considers possible impacts of size 

standard revisions on eligibility for 

Federal small business assistance 

(including access to small business setaside contracts and SBA’s financial 

assistance), current economic 

conditions, the Administration’s 

policies, and suggestions from industry 

groups and Federal agencies. Public 

comments on proposed rules also 

provide important additional 

information. SBA thoroughly reviews all 

public comments before making a final 

decision on its proposed revisions to 

size standards. Below are brief 

descriptions of each of the five primary 

factors that SBA has evaluated for each 

industry being reviewed in this 

proposed rule. A more detailed 

description of this analysis is provided 

in the SBA’s Methodology, available at 

www.sba.gov/size. 

1. Average Firm Size 

SBA computes two measures of 

average firm size: Simple average and 

weighted average. For industries with 

employee-based size standards, the 

simple average is the total employees of 

the industry divided by the total 

number of firms in the industry. The 

weighted average firm size is the 

summation of all the employees of the 

firms in an industry multiplied by their 

share of employees in the industry. The 

simple average weighs all firms within 

an industry equally regardless of their 

size. The weighted average overcomes 

that limitation by giving more weight to 

larger firms. The size standard 

supported by average firm size is 

obtained by averaging size standards 

supported by simple average firm size 

and weighted average firm size. 

If the average firm size of an industry 

is higher than the average firm size for 

most other industries, this would 

generally support a size standard higher 

than the size standards for other 

industries. Conversely, if the industry’s 

average firm size is lower than that of 

most other industries, it would provide 

a basis to assign a lower size standard 

as compared to size standards for most 

other industries. 

2. Startup Costs and Entry Barriers 

Startup costs reflect a firm’s initial 

size in an industry. New entrants to an 

industry must have sufficient capital 

and other assets to start and maintain a 

viable business. If firms entering an 

industry under review have greater 

capital requirements than firms in most 

other industries, all other factors 

remaining the same, this would be a 

basis for a higher size standard. 

Conversely, if the industry has smaller 

capital needs compared to most other 

industries, a lower size standard would 

be considered appropriate. 

Given the lack of actual data on 

startup costs and entry barriers by 

industry, SBA uses average assets as a 

proxy for startup costs and entry 

barriers. To calculate average assets, 


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SBA begins with the sales to total assets 

ratio for an industry from the Risk 

Management Association’s Annual 

Statement Studies, available at https://

rmau.org. SBA then applies these ratios 

to the average receipts of firms in that 

industry obtained from the Economic 

Census tabulation. 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 similar to or 

lower than most other industries is 

likely to have lower startup costs; this 

will support either lowering or 

maintaining the size standard. 

3. Industry Competition 

Industry competition is generally 

measured by the share of total industry 

receipts generated by the largest firms in 

an industry. SBA generally evaluates the 

share of industry receipts generated by 

the four largest firms in each industry. 

This is referred to as the ‘‘four-firm 

concentration ratio,’’ a commonly used 

economic measure of market 

competition. Using the four-firm 

concentration ratio, SBA compares the 

degree of concentration within an 

industry to the degree of concentration 

of the other industries with the same 

measure of size standards. If a 

significantly higher share of economic 

activity within an industry is 

concentrated among the four largest 

firms compared to most other 

industries, all else being equal, SBA 

would set a size standard that is 

relatively higher than for most other 

industries. Conversely, if the market 

share of the four largest firms in an 

industry is appreciably lower than the 

similar share for most other industries, 

the industry will be assigned a size 

standard that is lower than those for 

most other industries. 

4. Distribution of Firms by Size 

SBA examines the shares of industry 

total receipts accounted for by firms of 

different receipts and employment sizes 

in an industry. This is an additional 

factor SBA considers in assessing 

competition within an industry besides 

the four-firm concentration ratio. If the 

preponderance of an industry’s 

economic activity is attributable to 

smaller firms, this generally indicates 

that small businesses are competitive in 

that industry, which would support 

adopting a smaller size standard. A 

higher size standard would be 

supported for an industry in which the 

distribution of firms indicates that most 

of the economic activity is concentrated 

among the larger firms. 

Concentration is a measure of 

inequality of distribution. To determine 

the degree of inequality of distribution 

in an industry, SBA computes the Gini 

coefficient, using the Lorenz curve. The 

Lorenz curve presents the cumulative 

percentages of units (firms) along the 

horizontal axis and the cumulative 

percentages of receipts (or other 

measures of size) along the vertical axis. 

(For further detail, see SBA’s 

Methodology on its website at 

www.sba.gov/size.) Gini coefficient 

values vary from zero to one. If receipts 

are distributed equally among all the 

firms in an industry, the value of the 

Gini coefficient will equal zero. If an 

industry’s total receipts are attributed to 

a single firm, the Gini coefficient will 

equal one. 

SBA compares the degree of 

inequality of distribution for an industry 

under review with other industries with 

the same type of size standards. If an 

industry shows a higher degree of 

inequality of distribution (hence a 

higher Gini coefficient value) compared 

to most other industries in the group 

this would, all else being equal, warrant 

a size standard that is higher than the 

size standards assigned to most other 

industries. Conversely, an industry with 

lower degree of inequality (i.e., a lower 

Gini coefficient value) than most others 

will be assigned a lower size standard 

relative to others. 

5. Federal Contracting 

As the fifth factor, SBA examines the 

success small businesses are having in 

winning Federal contracts under the 

current size standard as well as the 

possible impact a size standard change 

may have on Federal small business 

contracting opportunities. The Small 

Business Act requires the Federal 

Government to ensure that small 

businesses receive a ‘‘fair proportion’’ of 

Federal contracts. The legislative history 

also discusses the importance of size 

standards in Federal contracting. To 

incorporate the Federal contracting 

factor in the size standards analysis, 

SBA evaluates small business 

participation in Federal contracting in 

terms of the share of total Federal 

contract dollars awarded to small 

businesses relative to the small business 

share of 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 respect to the Federal 

contracting factor. 

The disparity between the small 

business Federal market share and 

industry-wide small business share may 

be due to various factors, such as 

extensive administrative and 

compliance requirements associated 

with Federal contracts, the different 

skill set required to perform Federal 

contracts as compared to typical 

commercial contracting work, and the 

size of Federal contracts. These, as well 

as other factors, are likely to influence 

the type of firms within an industry that 

compete for Federal contracts. By 

comparing the small business Federal 

contracting share with the industrywide small business share, SBA 

includes in its size standards analysis 

the latest Federal market conditions. 

Besides the impact on Federal 

contracting, SBA also examines impacts 

on SBA’s loan programs both under the 

current and revised size standards. 

Sources of Industry and Program Data 

SBA’s primary source of industry data 

used in this proposed rule for evaluating 

industry characteristics and developing 

size standards is a special tabulation of 

the Economic Census from the U.S. 

Census Bureau (www.census.gov/econ/ 

census). The tabulation based on the 

2012 Economic Census was the latest 

available when this proposed rule was 

developed. The special tabulation 

provides industry data on the number of 

firms, number of establishments, 

number of employees, annual payroll, 

and annual receipts of companies by 

Industry (6-digit level), Industry Group 

(4-digit level), Subsector (3-digit level), 

and Sector (2-digit level). These data are 

arrayed by various classes of firms’ size 

based on the overall number of 

employees and receipts of the entire 

enterprise (all establishments and 

affiliated firms) from all industries. The 

special tabulation also 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 size 

distributions of firms by various receipts 

and employment size groupings. 

In some cases where data were not 

available due to disclosure prohibitions 

in the Census Bureau’s tabulation, SBA 

either estimated missing values using 

available relevant data or examined data 

at a higher level of industry aggregation, 

such as at the NAICS two-digit (Sector), 


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three-digit (Subsector), or four-digit 

(Industry Group) level. In some 

instances, SBA’s analysis was based 

only on those factors for which data 

were available or estimates of missing 

values were possible. 

To evaluate some industries that are 

not covered by the Economic Census, 

SBA used a similar special tabulation of 

the latest County Business Patterns 

(CBP) published by the U.S. Census 

Bureau (www.census.gov/programssurveys/cbp.html). Similarly, to evaluate 

industries in NAICS Sector 11 that are 

also not covered by the Economic 

Census and CBP, SBA evaluated a 

similar special tabulation based on the 

2012 Census of Agriculture 

(www.nass.usda.gov) from the National 

Agricultural Statistics Service (NASS). 

Besides the Economic Census, 

Agricultural Census and CBP 

tabulations, SBA also evaluates relevant 

industry data from other sources when 

necessary, especially for industries that 

are not covered by the Economic Census 

or CBP. These include the Quarterly 

Census of Employment and Wages 

(QCEW, also known as ES–202 data) 

(www.bls.gov/cew/) and Business 

Employment Dynamics (BED) data 

(www.bls.gov/bdm/) from the U.S. 

Bureau of Labor Statistics. Similarly, to 

evaluate certain financial industries that 

have asset-based size standards, SBA 

examines the data from the Statistics on 

Depository Institutions (SDI) database 

(www5.fdic.gov/sdi/main.asp) of the 

Federal Depository Insurance 

Corporation (FDIC) data. Finally, to 

evaluate the capacity component of the 

Petroleum Refiners (NAICS 324110) size 

standard, SBA evaluates the petroleum 

production data from the Energy 

Information Administration 

(www.eia.gov). 

To calculate average assets, SBA used 

sales to total assets ratios from the Risk 

Management Association’s Annual 

eStatement Studies, 2016–2018 (https:// 

rmau.org). To evaluate the Federal 

contracting factor, SBA examined the 

data on Federal prime contract awards 

from the Federal Procurement Data 

System—Next Generation (FPDS–NG) 

(www.fpds.gov) for fiscal years 2016– 

2018. To assess the impact on financial 

assistance to small businesses, SBA 

examined its internal data on 7(a) and 

504 loan programs for fiscal years 2018– 

2020. For some portion of impact 

analysis, SBA also evaluated data from 

FPDS–NG for fiscal years 2018–2020 

and the System for Award Management 

(SAM) (www.sam.gov). 

Data sources and estimation 

procedures SBA uses in its size 

standards analysis are documented in 

detail in SBA’s Methodology, which is 

available at www.sba.gov/size. 

Dominance in Field of Operation 

Section 3(a) of the Small Business Act 

(15 U.S.C. 632(a)) defines a small 

business concern as one that is: (1) 

Independently owned and operated; (2) 

Not dominant in its field of operation; 

and (3) Within a specific small business 

definition or size standard established 

by the SBA Administrator. SBA 

considers as part of its evaluation 

whether a business concern at a 

proposed or revised size standard would 

be dominant in its field of operation. 

For this, SBA generally examines the 

industry’s market share of firms at the 

proposed or revised size standard as 

well as the distribution of firms by size. 

Market share and size distribution may 

indicate whether a firm can exercise a 

major controlling influence on a 

national basis in an industry where a 

significant number of business concerns 

are engaged. If a contemplated size 

standard includes a dominant firm, SBA 

will consider a lower size standard to 

exclude the dominant firm from being 

defined as small. 

Selection of Size Standards 

In the 2009 Methodology, SBA 

applied to the first five-year 

comprehensive review of size standards, 

SBA adopted a fixed number of size 

standards levels as part of its effort to 

simplify size standards. In response to 

public comments to the 2009 

Methodology white paper, and the 2013 

amendment to the Small Business Act 

(section 3(a)(8)) under section 1661 of 

the National Defense Authorization Act 

for Fiscal Year 2013 (‘‘NDAA 2013’’) 

(Pub. L. 112–239, January 2, 2013), in 

the 2019 Methodology, SBA has relaxed 

the limitation on the number of small 

business size standards. Specifically, 

section 1661 of NDAA 2013 states ‘‘SBA 

cannot limit the number of size 

standards, and shall assign the 

appropriate size standard to each 

industry identified by NAICS.’’ 

In the revised Methodology, SBA 

calculates a separate size standard for 

each NAICS industry. However, to 

account for errors and limitations 

associated with various data SBA 

evaluates in the size standards analysis, 

SBA rounds the calculated size standard 

value for a receipts-based size standard 

to the nearest $500,000, except for 

agricultural industries in Subsectors 111 

and 112 for which the calculated size 

standards will be rounded to the nearest 

$250,000. Similarly, the calculated 

value for an employee-based size 

standard is rounded to the nearest 50 

employees for industries in 

manufacturing and other sectors (except 

Wholesale Trade and Retail Trade) and 

to the nearest 25 employees for 

industries in Wholesale Trade and 

Retail Trade. This rounding procedure 

is applied both in calculating a size 

standard for each of the five primary 

factors and in calculating the overall 

size standard for the industry. 

As a policy decision, SBA continues 

to maintain the minimum and 

maximum levels for both receipts and 

employee-based size standards. 

Accordingly, SBA will not generally 

propose or adopt a size standard that is 

either below the minimum level or 

above the maximum, even though the 

calculations may yield values below the 

minimum or above the maximum. The 

minimum size standard reflects the size 

an established small business should be 

to have adequate capabilities and 

resources to be able to compete for and 

perform Federal contracts (but does not 

account for small businesses that are 

newly formed or just starting 

operations). On the other hand, the 

maximum size standard represents the 

level above which businesses, if 

qualified as small, would outcompete 

much smaller businesses when 

accessing Federal assistance. 

With respect to employee-based size 

standards, SBA has established 250 

employees and 1,500 employees, 

respectively, as the minimum and 

maximum size standard levels for 

Manufacturing and other industries 

(excluding Wholesale and Retail Trade). 

SBA has established 50 employees and 

250 employees, respectively, as the 

minimum and maximum employeebased size standard levels for Wholesale 

and Retail Trade. These levels reflect 

the current minimum of 100 employees 

and the current maximum of 1,500 

employees in SBA’s existing size 

standards. The industry data suggests 

that a 250-employee minimum and 

1,500-employee maximum size 

standards would be too high for 

Wholesale and Retail Trade industries. 

Accordingly, SBA has established 50 

employees as the minimum size 

standard and 250 employees as the 

maximum size standard for Wholesale 

and Retail Trade industries. 

Evaluation of Industry Factors 

As mentioned in the previous section, 

to assess the appropriateness of the 

current size standards, SBA evaluates 

the structure of each industry in terms 

of four economic characteristics or 

factors: average firm size, average assets 

size as a proxy for startup costs and 

entry barriers, the four-firm 

concentration ratio as a measure of 

industry competition, and size 


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distribution of firms using the Gini 

coefficient. For each size standard type 

(i.e., receipts-based, or employee-based), 

SBA ranks industries both in terms of 

each of the four industry factors and in 

terms of the existing size standard and 

computes the 20th percentile and 80th 

percentile values for both. SBA then 

evaluates each industry by comparing 

its value for each industry factor to the 

20th percentile and 80th percentile 

values for the corresponding factor for 

industries under a particular type of size 

standard. 

If the characteristics of an industry 

under review within a particular size 

standard type are similar to the average 

characteristics of industries within the 

same size standard type in the 20th 

percentile, SBA will consider adopting 

as an appropriate size standard for that 

industry the 20th percentile value of 

size standards for those industries. For 

each size standard type, if the industry’s 

characteristics are similar to the average 

characteristics of industries in the 80th 

percentile, SBA will assign a size 

standard that corresponds to the 80th 

percentile in the size standard rankings 

of industries. A separate size standard is 

established for each factor based on the 

amount of differences between the 

factor value for an industry under a 

particular size standard type and 20th 

percentile and 80th percentile values for 

the corresponding factor for all 

industries in the same type. 

Specifically, the actual level of the new 

size standard for each industry factor is 

derived by a linear interpolation using 

the 20th percentile and 80th percentile 

values of that factor and corresponding 

percentiles of size standards. Each 

calculated size standard is bounded 

between the minimum and maximum 

size standards levels, as discussed 

before. As noted earlier, the calculated 

value for an employee-based size 

standard is rounded to the nearest 50 

employees for industries in 

Manufacturing and other sectors (except 

Wholesale Trade and Retail Trade) and 

to the nearest 25 employees for 

industries in Wholesale Trade and 

Retail Trade. 

Table 2, 20th and 80th Percentiles of 

Industry Factors for Employee-Based 

Size Standards, shows the 20th 

percentile and 80th percentile values for 

average firm size (simple and weighted), 

average assets size, four-firm 

concentration ratio, and Gini coefficient 

for industries with employee-based size 

standards. 

TABLE 2—20TH AND 80TH PERCENTILES OF INDUSTRY FACTORS FOR EMPLOYEE-BASED SIZE STANDARDS

Industries/percentiles 

Simple average 

firm size 

(number of 

employees) 

Weighted average 

firm size 

(number of 

employees) 

Average 

assets size 

($ million) 

Four-firm 

concentration ratio 

(%) 

Gini coefficient 

Manufacturing and other industries, excluding Sectors 42 and 44–45 

20th percentile ....................................... 29.5 250.7 4.14 24.7 0.760 

80th percentile ....................................... 118.3 1,629.0 40.54 61.3 0.853 

Industries in Sectors 42 and 44–45 

20th percentile ....................................... 12.6 199.8 3.19 16.1 0.794 

80th percentile ....................................... 27.9 1,693.8 11.53 38.9 0.865 

Estimation of Size Standards Based on 

Industry Factors 

An estimated size standard supported 

by each industry factor is derived by 

comparing its value for a specific 

industry to the 20th percentile and 80th 

percentile values for that factor. If an 

industry’s value for a particular factor is 

near the 20th percentile value in the 

distribution, the supported size 

standard will be one that is close to the 

20th percentile value of size standards 

for industries in the size standards 

group (i.e., industries with employeebased size standards covered by this 

proposed rule), which is 500 employees. 

If a factor for an industry is close to the 

80th percentile value of that factor, it 

would support a size standard that is 

close to the 80th percentile value in the 

distribution of size standards, which is 

1,250 employees. For a factor that is 

within, above, or below the 20th-80th 

percentile range, the size standard is 

calculated using linear interpolation 

based on the 20th percentile and 80th 

percentile values for that factor and the 

20th percentile and 80th percentile 

values of size standards. 

For example, if an industry’s simple 

average firm size in number of 

employees is 50 employees, that would 

support a size standard of 650 

employees. According to Table 2, the 

20th percentile and 80th percentile 

values of average number of employees 

are 29.5 and 118.3 employees, 

respectively. The 50-employee average 

firm size is 23.1% between the 20th 

percentile value (29.5 employees) and 

the 80th percentile value (118.3 

employees) of simple average firm size 

in number of employees ((50 

employees¥29.5 employees) ÷ (118.3 

employees¥29.5 employees) = 0.2308 

or 23.1%)). Applying this percentage to 

the difference between the 20th 

percentile value (500 employees) and 

80th percentile (1,250 employees) value 

of size standards and then adding the 

result to the 20th percentile size 

standard value (500 employees) yields a 

calculated size standard value of 673 

employees ([{1,250 employees¥500 

employees} * 0.231] + 500 employees = 

673 employees). The final step is to 

round the calculated 673 employee size 

standard to the nearest 50 employees, 

which in this example yields 650 

employees. This procedure is applied to 

calculate size standards supported by 

other industry factors. Detailed formulas 

involved in these calculations are 

presented in SBA’s Methodology, which 

is available on its website at 

www.sba.gov/size. 

Derivation of Size Standards Based on 

Federal Contracting Factor 

Besides industry structure, SBA also 

evaluates Federal contracting data to 

assess the success of small businesses in 

getting Federal contracts under the 

existing size standards. For each 

industry with $20 million or more in 

annual Federal contract dollars, SBA 

evaluates the small business share of 

total Federal contract dollars relative to 

the small business share of total 

industry receipts. All other factors being 

equal, if the share of Federal contracting 

dollars awarded to small businesses in 

an industry is significantly less than the 

small business share of that industry’s 

total receipts, a justification would exist 

for considering a size standard higher 

than the current size standard. 


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Conversely, if the small business share 

of Federal contracting activity is near or 

above the small business share in total 

industry receipts, this will support the 

current size standard. 

SBA increases the existing size 

standards by certain percentages when 

the small business share of total 

industry receipts exceeds the small 

business share of total Federal contract 

dollars by ten or more percentage 

points. Proposed percentage increases 

generally reflect employee levels needed 

to bring the small business share of 

Federal contracts on par with the small 

business share of industry receipts. 

These proposed percentage increases for 

employee-based size standards are given 

in Table 3, Proposed Adjustments to 

Size Standards Based on Federal 

Contracting Factor. 

TABLE 3—PROPOSED ADJUSTMENTS TO SIZE STANDARDS BASED ON FEDERAL CONTRACTING FACTOR

Size standards 

Percentage difference between the small business shares of 

total Federal contract dollars in an industry 

and of total industry receipts 

>¥10% ¥10% to ¥30% <¥30% 

Employee-based standards: 

<500 employees ............................................................................................. No change ............ Increase 30% ........ Increase 60%. 

500 to <1,000 employees .............................................................................. No change ............ Increase 20% ........ Increase 40%. 

1,000 to <1,500 employees ........................................................................... No change ............ Increase 15% ........ Increase 25%. 

For example, if an industry with the 

current size standard of 750 employees 

had an average of $50 million in Federal 

contracting dollars, of which 15% went 

to small businesses, and if small 

businesses accounted for 40% of total 

receipts of that industry, the small 

business share of total Federal contract 

dollars would be 25% less than the 

small business share of total industry 

receipts (40%¥15%). According to the 

adjustments shown in Table 3 (above), 

the new size standard for the Federal 

contracting factor for that industry 

would be set by multiplying the current 

750 employee standard by 1.2 (i.e., 20% 

increase) and then by rounding the 

result to the nearest 50 employees, 

yielding a size standard of 900 

employees. 

SBA evaluated the small business 

share of total Federal contract dollars for 

the 210 industries covered by this 

proposed rule that had $20 million or 

more in average annual Federal contract 

dollars during fiscal years 2016–2018. 

The Federal contracting factor was 

significant (i.e., the difference between 

the small business share of total 

industry receipts and small business 

share of Federal contracting dollars was 

ten percentage points or more) in 64 of 

these industries, prompting an upward 

adjustment of their existing size 

standards based on that factor. For the 

remaining 146 industries that averaged 

$20 million or more in average annual 

contract dollars, the Federal contracting 

factor was not significant, and the 

existing size standard was applied for 

that factor. For industries with less than 

$20 million in average annual contract 

dollars, no size standard was calculated 

for the Federal contracting factor. 

Derivation of Overall Industry Size 

Standard 

The SBA’s methodology presented 

above results in five separate size 

standards based on evaluation of the 

five primary factors (i.e., four industry 

factors and one Federal contracting 

factor). SBA typically derives an 

industry’s overall size standard by 

assigning equal weights to size 

standards supported by each of these 

five factors. However, if necessary, 

SBA’s methodology would allow 

assigning different weights to some of 

these factors in response to its policy 

decisions and other considerations. For 

detailed calculations, see SBA’s 

methodology, available on its website at 

www.sba.gov/size. 

Calculated Size Standards Based on 

Industry and Federal Contracting 

Factors 

Table 4, Size Standards Supported by 

Each Factor for Each Industry 

(Employees), below, shows the results of 

analyses of industry and Federal 

contracting factors for each industry and 

subindustry (‘‘exception’’) covered by 

this proposed rule. NAICS industries in 

columns 2, 3, 4, 5, 6, 7, and 8 show two 

numbers. The upper number is the 

value for the industry or Federal 

contracting factor shown on the top of 

the column and the lower number is the 

size standard supported by that factor. 

Column 9 shows a calculated new size 

standard for each industry. This is the 

average of the size standards supported 

by each factor (the size standard for 

average firm size is an average of size 

standards supported by simple average 

firm size and weighted average firm 

size), rounded to the nearest 50 

employees for industries in 

Manufacturing and other sectors (except 

Wholesale Trade and Retail Trade) and 

to the nearest 25 employees for 

industries in Wholesale Trade and 

Retail Trade. Analytical details involved 

in the averaging procedure are described 

in SBA’s methodology, which is 

available on its website at www.sba.gov/ 

size. For comparison with the calculated 

new size standards, the current size 

standards are in column 10 of Table 4. 

BILLING CODE 8026–03–P 


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BILLING CODE 8026–03–C 

Evaluation of Size Standards for Select 

NAICS Industries and Subindustry 

Categories or ‘‘Exceptions’’ 

In accordance with the SBA’s 

approach to evaluating size standards 

for industries or subindustries (or 

‘‘exceptions’’) as described in the SBA’s 

size standards Methodology, in the 

following subsections, SBA evaluates 

the size standards for three NAICS 

industries and five exceptions that are 

not covered by the Economic Census 

tabulation. The three NAICS industries 

are NAICS 482211 (Line Haul 

Railroads), NAICS 482212 (Short Line 

Railroads), and NAICS 324110 

(Petroleum Refineries), for which the 

refining capacity component of the size 

standard is not covered by the Economic 

Census tabulation. The five exceptions 

are the three Research and Development 

(R&D) exceptions to NAICS 541715, the 

Information Technology Value Added 

Resellers (ITVAR) exception to NAICS 

541519, and the Environmental 

Remediation Services (ERS) exception 

to NAICS 562910. 

NAICS 324110—Petroleum Refineries 

Among all industries for which SBA 

establishes size standards, only NAICS 

324110 (Petroleum Refineries) 

comprises two size measures in its size 

standard—number of employees and 

total daily refining capacity. As 

explained in Footnote 4 of the SBA’s 

Table of Size Standards (13 CFR 

121.201), to qualify as small for 

purposes of Government procurement, 

the petroleum refiner, including its 

affiliates, must be a concern that has 

either no more than 1,500 employees or 

no more than 200,000 barrels per 

calendar day total Operable 

Atmospheric Crude Oil Distillation 

capacity. Capacity includes all domestic 

and foreign affiliates, all owned or 

leased facilities, and all facilities under 

a processing agreement or an 

arrangement such as an exchange 

agreement or a throughput. To qualify 

under the capacity size standard, the 

firm, together with its affiliates, must be 

primarily engaged in refining crude 

petroleum into refined petroleum 

products. A firm’s ‘‘primary industry’’ is 

determined in accordance with 13 CFR 

121.107. 

During the first five-year review of 

size standards, SBA proposed to 

increase the capacity component of the 

Petroleum Refiners industry (NAICS 

324110) size standard from 125,000 

barrels per calendar day (BPCD) total 

Operable Atmospheric Crude Oil 

Distillation capacity to 200,000 BPCD 

total capacity and retain the employee 

component at the 1,500-employee level 

(79 FR 54145 (November 10, 2014)). 

SBA also proposed to allow business 

concerns to qualify as small either 

under the 1,500-employee size standard 

or under the 200,000 BPCD capacity size 

standard, if they, together with affiliates, 

are primarily engaged in petroleum 

refining. Finally, SBA proposed to 

eliminate the requirement that, for 

purposes of Federal contracting, ‘‘[t]he 

total product to be delivered under the 

contract must be at least 90% refined by 

the successful bidder from either crude 

oil or bona fide feedstocks.’’ SBA 

determined that the 90% requirement 

was overly restrictive for small refiners 

to compete for government contracts. 

SBA adopted these proposed changes 

without amendments in a 2016 final 

rule (81 FR 4469 (January 26, 2016)). 

To evaluate the refining capacity 

component of the size standard for 

NAICS 324110 in the current review of 

size standards, SBA coordinated with 

the Defense Logistics Agency (DLA) to 

obtain a special tabulation of refinery 

production data, maintained by the 

Energy Information Administration 

(EIA). This tabulation included data on 

employees and various measures of 

production capacity. SBA also obtained 

the data from SAM, FPDS–NG, and 

other publicly available information 

such as corporate 10–K filings and 

annual reports to evaluate the economic 

characteristics of NAICS 324110 in 

terms of production capacity. 

To determine if the current size 

standard for Petroleum Refineries is still 

appropriate, SBA used the above data to 

analyze both total and aviation fuel 

capacity, as well as the number of 

employees of all refiners operating in 

the United States. SBA also examined 

industry trends and the Federal 

Government’s petroleum procurement 

needs. 

SBA’s analysis of the above data 

showed that the production capacity of 

the petroleum refineries industry is 

concentrated among the largest 30% of 

firms, as measured by BPCD total 

capacity. Specifically, the largest 30% of 

firms account for over 83% of the total 

industry production capacity. The 

average size of firms exceeding 200,000 

BPCD total production capacity is 

40,178 employees. 

Currently, about 60% of firms, 

representing 26% of employees, are 

classified as small under the 200,000 

BPCD total capacity size standard. The 

average size of these firms is 11,064 

employees. SBA’s analysis showed that 

increasing the total capacity size 

standard beyond the current 200,000 

BPCD level, even by 150% increase 

from the current level, would only 

marginally increase the number of small 

firms in this industry, and would 

include firms with characteristics 

similar to the dominant firms at the top 

of the size distribution. Based on this 

analysis, SBA proposes to maintain the 

refining capacity component of the size 

standard for Petroleum Refineries at 

200,000 BPCD total Operable 

Atmospheric Crude Oil Distillation 

capacity. As presented in Table 4 

(above), based on the data from the 2012 

Economic Census, SBA also proposes to 

maintain the employee component of 

the size standard for Petroleum 

Refineries at the current 1,500-employee 

level. 

NAICS 482111—Line Haul Railroads 

and NAICS 482112—Short Line 

Railroads 

SBA’s primary source of industry data 

used in this proposed rule is a special 

tabulation of the 2012 Economic Census 

prepared by the U.S. Bureau of the 

Census for SBA. The 2012 Economic 

Census data are the latest Economic 

Census data available at the time of 

drafting this proposed rule. 

In some cases, certain industries are 

not covered by the Economic Census; 

thus, they are not represented in the 

Census Bureau’s special tabulation. For 

those industries, SBA first identifies 

companies that are registered in SAM 

under those industry NAICS codes and 

then evaluates their employment and 

revenue data obtained from their SAM 

profiles. SBA supplements the SAM 

data with revenue and employment data 

from FPDS–NG and, in some cases, the 

data from other Federal agencies and 

industry trade groups to establish the 

industry characteristics necessary to 

evaluate the size standard for the 

industry. In some instances, SBA’s 

analysis is based only on those factors 

for which data are available or estimates 

of missing values are possible. SBA 

applied this approach to the evaluation 

of industry factors for two industries in 

NAICS Sector 48–49 that are not 

covered by the Economic Census, 

namely Line Haul Railroads (NAICS 

482111) and Short Line Railroads 

(NAICS 482112). 

During the first five-year review of 

size standards, based on the data from 

SAM, SBA proposed to maintain the 

1,500-employee size standard for Line 

Haul Railroads and increase the size 

standard for Short Line Railroads from 

500 employees to 1,500 employees (79 

FR 53646 (September 10, 2014)). In the 

final rule, SBA adopted this proposal 

without change (81 FR 4435 (January 26, 

2016)). 

To evaluate the size standard for these 

industries during the ongoing second 


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five-year size standards review, SBA 

relied on data from SAM, industry trade 

groups, and other Federal agencies. SBA 

sought data external to SAM because of 

a lack of adequate representation of 

firms in those industries in the SAM 

database. For example, the Railroad 

Facts 2019 Edition statistical 

publication of the American Association 

of Railroads (AAR) estimates that there 

were 613 railroads in the U.S. in 2017; 

however, the number of firms registered 

under NAICS 482111 or 482112 as their 

primary NAICS code was only 37 based 

on the 2019 SAM data. The data for 

these industries in FPDS–NG was also 

equally inadequate for purposes of 

evaluating size standards for those 

industries. Thus, SBA was not able to 

rely on the SAM and FPDS–NG data 

alone to determine the economic 

characteristics of those industries. SBA 

also evaluated its internal data from its 

7(a), 504, and disaster loan programs for 

purposes of determining economic 

characteristics of NAICS 482111 and 

482112; however, SBA found that there 

was very limited loan activity in those 

industries. 

To determine the economic 

characteristics of NAICS 482111 and 

482112 and calculate the industry 

factors for evaluation of their size 

standards, SBA relied on the 2018 data 

from the Railroad Retirement Board 

(RRB), which publishes employment 

data for railroad employers. SBA used 

this data to calculate the simple and 

weighted average firm size in terms of 

employees. SBA used the data from 

AAR and the American Short Line and 

Regional Railroad Association 

(ASLRRA) to calculate average assets 

and the four-firm concentration ratio. 

SBA was not able to obtain suitable data 

on receipts to calculate the Gini 

coefficient values for these industries. 

SBA requests suggestions on sources of 

data for the railroad industry that 

include an estimate of the receipts per 

firm similar to the employee data 

provided by the RRB. 

Based on the data from the RRB, SBA 

was unable to reliably determine the 

number of railroads primarily engaged 

in either the Line Haul Railroad or Short 

Line Railroad industry. For statistical 

and regulatory purposes, most Federal 

agencies and trade associations do not 

classify railroads in terms of line haul 

or short line railroads. Instead, railroads 

are classified based on other 

characteristics, such as class, revenue, 

or track mileage owned/operated. For 

example, the Surface Transportation 

Board (STB), the Federal agency 

responsible for regulating railroad rates 

and service, categorizes rail carriers into 

three classes: Class I, Class II, and Class 

III. These classes are based on the 

carrier’s annual operating revenues. For 

2019, Class I carriers were defined as 

those earning above $504.80 million in 

revenue; Class II carriers as those 

earning $40.38 million or more in 

revenue and less than the Class I 

threshold; and Class III carriers as those 

earning less than the Class II minimum. 

The AAR identifies two groups of nonClass I railroads based on revenue and 

track mileage covered: Regional 

railroads and Local railroads. Regional 

railroads are line haul railroads below 

the Class I revenue threshold, operating 

at least 350 miles of railroad track and 

earning at least $20 million in revenue, 

or earning revenue between $40 million 

and the Class I revenue threshold, 

regardless of track mileage operated. 

Local railroads are line haul railroads 

below the Regional criteria, plus 

switching and terminal railroads. The 

RRB classifies railroads by Class I and 

non-Class I operator. Based on the 

available data, SBA was not able to 

reliably determine the composition of 

the railroad industry at the 6-digit 

NAICS industry level. Thus, for 

purposes of analysis, SBA combines the 

operators in NAICS industries 482111 

and 482112 to determine a size standard 

for those industries. 

The results from SBA’s analysis are 

presented in Table 4 (above) of this 

proposed rule. The analysis supports 

maintaining the current size standard of 

1,500 employees for both the Line Haul 

Railroad (NAICS 482111) and Short 

Line Railroad industries (NAICS 

482112). SBA invites comments, along 

with supporting information, on this 

proposal as well as sources of data that 

more clearly define the economic 

characteristics of these industries. 

Exception to NAICS 541519— 

Information Technology Value Added 

Resellers 

Information Technology Value Added 

Resellers (ITVAR) is a subindustry (or 

‘‘exception’’) under NAICS 541519 

(Other Computer Related Services). SBA 

first proposed to establish this 

subindustry category in 2002 in order to 

better apply small business eligibility 

requirements under Federal contracts 

that combine substantial services with 

the acquisition of computer hardware 

and software (67 FR 48419 (July 24, 

2002)). The following year, SBA 

adopted the ITVAR industry category, as 

proposed, with a size standard of 150 

employees (68 FR 74833 (December 28, 

2003)). As stated in Footnote 18 to the 

SBA’s Table of Size Standards, for a 

Federal contract to be classified under 

the ITVAR subindustry or ‘‘exception’’ 

and its 150-employee size standard, it 

must consist of at least 15% but not 

more than 50% of value added services, 

as measured by the total price less cost 

of computer hardware and software, and 

profit. If the contract consists of less 

than 15% of value-added services, it 

must be classified under the appropriate 

manufacturing NAICS industry. If the 

contract consists of more than 50% of 

value-added services, it must be 

classified under the NAICS industry 

that best describes the principal nature 

of services being procured. 

In 2014, as part of the first 5-year 

review of size standards, SBA proposed 

to eliminate the ITVAR exception due to 

inconsistencies and misuse (79 FR 

53646 (September 10, 2014)). For 

example, SBA’s evaluation of FPDS–NG 

data and solicitations at that time 

revealed many cases of misuse where 

Federal agencies applied the 150- 

employee size standard, instead of the 

receipts-based size standard, for 

contracts that were predominantly for 

services. Moreover, SBA found the use 

of the ITVAR exception was 

discretionary and inconsistent with 

other SBA’s regulations. Under the 

terms of the exception as stated in 

Footnote 18 in the SBA’s Table of Size 

Standards, it is clear that the majority of 

the cost of the contracts that qualify 

under the ITVAR exception and its 150- 

employee size standard will be incurred 

for supplies. Thus, instead of using the 

ITVAR 150-employee size standard 

under NAICS 541519, a contracting 

officer could alternatively use a 

manufacturing NAICS code, such as 

NAICS 334111 (Electronic Computer 

Manufacturing) with a 1,000-employee 

size standard, to which the 500- 

employee nonmanufacturer size 

standard would also apply. Thus, firms 

may or may not be eligible or be able to 

compete as a small business for the 

exact same contract simply based on the 

contracting officer’s selection of the 

NAICS code and size standard. SBA 

found that this was inconsistent with 

SBA’s regulations that require 

contracting officers to select the NAICS 

code that best describes the principal 

purpose of the acquisition (see 13 CFR 

121.402(b)). Many commenters to the 

2014 SBA’s proposed rule agreed with 

these findings but were strongly against 

the SBA’s proposal to eliminate the 

ITVAR exception and its 150-employee 

size standard. Commenters viewed that 

the SBA’s proposal would force small 

ITVARs with fewer than 150 employees 

to compete for Federal opportunities 

with large companies with up to 500 

employees under the 500-employee 

nonmanufacturer size standard. To 

address these concerns, in the 2016 final 


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2SBA analysts found that increasing the 

percentage of ITVAR services and products PSCs in 

total receipts to 5% to exclude firms for which 

those PSCs contributions to their receipts is very 

limited, and applying other refinements to the list 

of 1,210 firms—such as excluding firms with a 

majority focus on services and excluding firms 

having less than 1% of total receipts coming from 

products—ultimately produced a similar calculated 

size standard. 

rule, SBA amended Footnote 18 by 

retaining the ITVAR exception and its 

150-employee size standard and adding 

the requirement that the offeror on small 

business set-aside ITVAR contracts must 

comply with the manufacturing 

performance requirements or the 

nonmanufacturer rule (81 FR 4436 

(January 26, 2016)). 

In this proposed rule, to review the 

150-employee size standard for the 

ITVAR exception to NAICS 541519, 

SBA evaluated the data from FPDS–NG 

and SAM using a two-step procedure. 

First, using FPDS–NG, SBA identified 

Product Service Codes (PSCs) that 

correspond to contracts under the 

ITVAR exception. SBA then identified 

firms that have received Federal 

contracts under those PSCs and 

evaluated their receipts and employees’ 

data from SAM and FPDS–NG to derive 

the values of industry and Federal 

contracting factors. SBA uses this 

approach because the data that SBA 

receives from the Census Bureau’s 

Economic Census tabulation are limited 

to the 6-digit NAICS industry level and 

therefore do not provide information on 

economic characteristics of firms at the 

subindustry level. 

SBA found that contracting activity 

for the ITVAR exception is distributed 

over roughly 36 different PSCs. Each of 

these PSCs describe the activity of 

procuring either an IT product, or an IT 

service, but not both. Generally, the 

code structure of the PSC classification 

system is such that PSCs for products 

start with a number whereas PSCs for 

services begin with an alphabet. Table 5, 

Top 5 ITVAR Related PSCs by Average 

Total Dollars Obligated, below, 

identifies the top 5 PSCs for ITVAR 

related products and services. The table 

also displays average total dollars 

obligated under each PSC for fiscal 

years 2016–2018, and the product or 

services identifier for each PSC. 

TABLE 5—TOP 5 ITVAR RELATED PSCS BY AVERAGE TOTAL DOLLARS OBLIGATED

PSC PSC description 

Average total 

dollars obligated 

in FY 2016–2018 

($ million) 

PSC type 

D399 .............. IT and telecom—other IT and telecommunications .............................................................. $2,419,341 Service. 

7030 ............... Information technology software ........................................................................................... 1,824,017 Product. 

D319 .............. IT and telecom—annual software maintenance service plans ............................................. 761,227 Service. 

7050 ............... Information technology components ..................................................................................... 673,647 Product. 

D318 .............. IT and telecom—integrated hardware/software/services solutions, predominantly services 664,801 Service. 

Due to the involvement of numerous 

PSCs discussed above, SBA was unable 

to reliably determine a singular PSC that 

would adequately represent the level of 

activity corresponding uniquely to the 

ITVAR exception, which by definition 

includes both product and servicerelated activities. For purposes of 

analysis, and in an effort to differentiate 

economic activity under the ITVAR 

exception and determine the economic 

characteristics of the firms comprising 

this subindustry, SBA analyzed the 

FPDS–NG and SAM data. For this, SBA 

analysts first queried the FPDS–NG data 

for fiscal years 2016–2018 to match 

firms with a primary NAICS of 541519 

and at least one contract with an ITVAR 

PSC for products to firms with a 

primary NAICS of 541519 and at least 

one contract with an ITVAR PSC for 

services; that is, SBA identified firms 

with a primary NAICS of 541519 with 

at least one contract under both a 

product and service-related PSC. This 

query resulted in a total of 1,210 firms. 

Further analysis showed that, for many 

of these 1,210 firms, the percentage of 

total revenues from ITVAR services and 

products PSCs was very low, which 

SBA used as an indication that the 

revenue structure of such firms was not 

representative of a typical ITVAR firm. 

Therefore, using a similar procedure 

that SBA applied in the analysis of the 

Dredging and Surface Cleanup 

Activities exception to NAICS 237990 

(Other Heavy and Civil Engineering 

Construction) (85 FR 62239 (December 

1, 2020)), SBA excluded firms from the 

analysis whose combined dollars 

obligated to both ITVAR services and 

products PSCs did not exceed 2.5% of 

their total receipts. SBA further refined 

the analysis by excluding firms with an 

average revenue below $1,000. After 

these exclusions, SBA was left with 485 

firms for purposes of analysis.2

Together, those 485 firms represented 

55% of the dollars obligated to original 

1,210 firms under the top 5 ITVARrelated PSCs identified in Table 5. SBA 

analyzed those 485 firms to obtain the 

four industry factors (average firm size, 

average assets size, four-firm ratio, and 

Gini coefficient) and the Federal 

contracting factor for the ITVAR 

subindustry or exception. 

In its 2003 final rule (68 FR 74833 

(December 29, 2003)), SBA used a 

hybrid approach to create and evaluate 

the ITVAR exception. Specifically, 

based on the assumption that ITVARs 

operate in NAICS Industry Group 5415 

(Computer System Design and Related 

Services) and in NAICS 423430 

(Computer and Computer Peripheral 

Equipment and Software Merchant 

Wholesalers), SBA combined part of 

NAICS Industry Group 5415 with part of 

NAICS 423430 using the 1997 Economic 

Census data and defined the result as 

the ITVAR subindustry and used it as 

the basis to establish the characteristics 

of ITVAR firms. As discussed in the 

2016 final rule (81 FR 4436 (January 26, 

2016)), SBA now finds several problems 

with that approach. First, there is no 

need to create the ITVAR industry in 

that manner because, based on their 

primary activity of selling computer 

hardware and software, ITVARs are 

included in NAICS 423430. 

Accordingly, SBA now believes the 

industry data for NAICS 423430 alone 

would provide a more accurate 

description of ITVAR firms than the 

hybrid approach, especially given 

significant differences in economic 

structure between firms in NAICS 

Industry Group 5415 and ITVAR firms, 

as suggested by the Economic Census 

data and also confirmed by many 

commenters at that time. Similar to the 

2016 final rule, SBA’s analysis in this 

proposed rule is based on the premise 

that ITVARs are most closely related to 

wholesalers, supplying computer 

hardware and software as 

nonmanufacturers. Thus, any size 

standard exception to the ITVARs 

should be addressed within the context 

of the nonmanufacturer rule. As such, in 

this proposed rule, SBA uses the 20th 

and 80th percentile values of industry 


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factors for employee-based size 

standards for Wholesale Trade and 

Retail Trade shown in Table 2 (above), 

along with the 20th and 80th percentile 

values of employee-based size standards 

in those sectors, as a basis for reviewing 

the size standard for the ITVAR 

exception. 

Table 6, Size Standards Supported by 

Each Factor for the ITVAR Exception to 

NAICS 541519 (Employees), below, 

shows the results of analyses of industry 

and Federal contracting factors for the 

ITVAR exception, along with size 

standards supported by each industry 

and Federal contracting factors. The 

analysis supports maintaining the 

current size standard of 150 employees. 

As such, SBA proposes to retain the 

150-employee size standard for the 

ITVAR exception with no additional 

changes to the terms of this industry 

exception SBA invites comments, along 

with supporting information, on this 

proposal as well as suggestions for 

alternative sources of data that more 

clearly define the economic 

characteristics of ITVARs. 

TABLE 6—SIZE STANDARDS SUPPORTED BY EACH FACTOR FOR THE ITVAR EXCEPTION TO NAICS 541519 (EMPLOYEES) 

[Upper value = calculated factor, lower value = size standard supported] 

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) 

NAICS code NAICS industry title Type Simple 

average 

firm size 

(number of 

employees) 

Weighted 

average 

firm size 

(number of 

employees) 

Average 

assets size 

($ million) 

Four-firm 

ratio 

(%) 

Gini 

coefficient 

Federal 

contract 

factor 

(%) 

Calculated 

size 

standard 

(number of 

employees) 

Current size 

standard 

(number of 

employees) 

541519 (ITVAR Exception) ......... Factor ....... 136.5 3,594.9 $13.6 19.7 0.743 25.5 .................... ....................

Size Std ... 250 250 250 75 50 150 150 150 

Exceptions to NAICS 541715—Aircraft, 

Aircraft Engine and Engine Parts; Other 

Aircraft Parts and Auxiliary Equipment; 

and Guided Missiles and Space 

Vehicles, Their Propulsion Units and 

Propulsion Parts 

Currently, NAICS 541715 (Research 

and Development in the Physical, 

Engineering, and Life Sciences (except 

Biotechnology)) has three subindustries 

or ‘‘exceptions.’’ As stated in Footnote 

11 to the SBA’s Table of Size Standards, 

for Research and Development (R&D) 

contracts requiring the delivery of a 

manufactured product, the appropriate 

size standard is that of the 

corresponding manufacturing industry. 

The three exceptions under NAICS 

541715 and their corresponding 

manufacturing industry counterparts 

and their size standards are shown in 

Table 7, NAICS 541715 Exceptions and 

Corresponding Manufacturing Size 

Standards (Employees), below. This 

table also displays the proposed size 

standards for each of the three 

exceptions and corresponding 

manufacturing industries. 

To better match size standards for the 

exceptions to the corresponding 

employee-based industry size standards 

in manufacturing, SBA proposes to 

increase the size standard of the third 

exception (Guided Missiles and Space 

Vehicles, Their Propulsion Units and 

Propulsion Parts) from 1,250 employees 

to 1,300 employees by adopting the 

highest size standard of that exception’s 

corresponding manufacturing industry 

counterparts. As shown in Table 7 

(below), SBA retains the current size 

standards for the other two exceptions. 

TABLE 7—NAICS 541715 EXCEPTIONS AND CORRESPONDING MANUFACTURING SIZE STANDARDS (EMPLOYEES) 

Exception Manufacturing NAICS code and industry title Current size 

standard 

Calculated 

size 

standard 

Proposed 

size 

standard 

Proposed 

size 

standard for 

the exception 

Current size 

standard for 

the exception 

Aircraft, Aircraft Engine and Engine Parts.336411—Aircraft Manufacturing .............................

336412—Aircraft Engine and Engine Parts Manufacturing.

1,500 

1,500 

1,500 

1,500 

1,500 

1,500 

1,500 1,500 

Other Aircraft Parts and Auxiliary 

Equipment.

336413—Other Aircraft Part and Auxiliary Equipment Manufacturing.1,250 1,200 1,250 1,250 1,250 

Guided Missiles and Space Vehicles, Their Propulsion Units 

and Propulsion Parts.

336414—Guided Missile and Space Vehicle Manufacturing.

336415—Guided Missile and Space Vehicle Propulsion Unit and Propulsion Unit Parts Manufacturing.

1,250 

1,250 

1,300 

1,200 

1,300 

1,250 

1,300 1,250 

336419—Other Guided Missile and Space Vehicle 

Parts and Auxiliary Equipment Manufacturing.

1,000 1,050 1,050 ........................ ........................

Exception to NAICS 562910— 

Environmental Remediation Services 

In 2016, SBA increased the size 

standard for Environmental 

Remediation Services (ERS) exception 

to NAICS 562910 (Remediation 

Services) from 500 employees to 750 

employees (81 FR 4436 (January 26, 

2016)). The requirements that apply to 

the ERS exception and its 750-employee 

size standard for Federal procurement 

and SBA’s financial assistance are 

defined in Footnote 14 to the SBA’s 

Table of Size Standards (13 CFR 

121.201). SBA requires that for a 

Government contract to be classified 

under the ERS exception, it should 

cover activities in three or more separate 

industries that each could be 

categorized in separate NAICS codes. If 

any activity in the procurement can be 

identified with a separate NAICS code, 

or component of a code with a distinct 

size standard, and that industry 

accounts for 50% or more of the value 

of the entire procurement, then the 

proper size standard is the one for that 

industry, and not the ERS exception size 

standard. 

In 1994, SBA established the 500- 

employee based size standard for the 

ERS exception for Federal procurements 

and for SBA assistance (59 FR 47236 

(September 15, 1994)). The Agency 

determined that ERS was an emergent 

industry in which firms perform tasks 

that depart from traditional activities in 

any one industry defined (at the time) 


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in the Standard Industrial Classification 

(SIC) system, and the types of activities 

were requiring larger firms to be able to 

perform them. When the North 

American Industry Classification 

System (NAICS) was adopted by the 

Federal Government in 1997, one of the 

new industries identified with a sixdigit code was NAICS 562910 

(Remediation Services), and one of the 

activities on the scope of NAICS 562910 

was the environmental remediation 

services. 

SBA believes that the justification for 

the creation of an environmental 

remediation services subindustry within 

NAICS 562910 with a special size 

standard in 1994 is still valid today. 

NAICS 562910 includes some 

remediation activities (e.g., collection 

and disposal of garbage, ashes, rubbish 

and sweeping services), which are 

usually performed by smaller firms 

relative to the size of firms performing 

activities that fall under environmental 

remediation services. 

As explained previously in the 

Sources of Industry and Program Data 

section, the data from the Census 

Bureau’s Economic Census tabulation 

are limited to the 6-digit NAICS 

industry level and hence do not provide 

all the economic characteristics for the 

ERS subindustry. Thus, similar to the 

evaluation of other exceptions, in 

accordance with the SBA’s size 

standards methodology, in this 

proposed rule, SBA analyzed the data 

coming from FPDS–NG and SAM to 

evaluate the size standard for the ERS 

exception. 

First, using FPDS–NG data for fiscal 

years 2016–2018, SBA identified firms 

that participated in Federal contracts 

using the Product Service Codes (PSCs) 

F108 (Environmental Systems 

Protection—Environmental 

Remediation) and F999 (Other 

Environmental Services) within NAICS 

562910. Then, SBA obtained those 

firms’ revenue and employment data 

from the information related to the ERS 

awards in FPDS–NG, and the data from 

SAM was used to complement the 

information available in FPDS–NG. 

SBA identified 1,151 firms receiving 

Federal contracts under NAICS 562910 

and PSCs F108 and F999. Initially, the 

number of firms was obtained by 

counting the DUNS numbers, but 

because the DUNS numbers refer to a 

location, multi-establishments firms 

will have more than one DUNS number. 

So, SBA decided to identify those firms 

using Global DUNS numbers, reducing 

the number of firms to 1,033. After 

deleting firms with null values for 

number of employees or revenue, the 

number of firms was reduced to 979. 

SBA also deleted entities that could be 

identified as government agencies or as 

manufacturers, further reducing the 

number of ERS firms to 962. 

As discussed in the SBA’s size 

standards methodology white paper, 

when reviewing size standards for 

subindustries or ‘‘exceptions’’ using the 

SAM and FPDS–NG data, to reduce the 

impact of the differences between the 

industry data from the Economic Census 

and the data obtained from FPDS–NG 

and SAM, SBA may (i) identify and 

remove firms whose primary activity is 

not the subindustry or exception under 

review (in this case ERS), (ii) trim the 

data to prevent extreme observations 

from distorting the results, or (iii) apply 

a combination of these two approaches. 

The dollars awarded by firms’ 

employment size indicate a large 

concentration of the ERS activity among 

the largest firms. Small firms with less 

than or equal to 750 employees received 

about 37% of the total ERS dollar 

awards during fiscal years 2016–2018, 

while firms with more than 5,000 

employees accounted for about 60% of 

the total ERS contract awards. 

Moreover, just two firms with more than 

5,000 employees accounted for almost 

40% of the total awards under ERS 

activities. The rest of the ERS contract 

dollars (3.5%) went to firms between 

750 employees and 5,000 employees. 

Since fiscal year 2016, the share of 

total ERS contract dollars awarded to 

small businesses decreased 

significantly, from an average of 50.0% 

in fiscal years 2013–2015 to an average 

of 37.0% in fiscal years 2016–2018. SBA 

believes that the large skewness in the 

distribution of ERS firms by the number 

of employees, the large percentage of 

ERS contracting dollars being 

concentrated among very large firms, 

and a decrease in the small business 

share of total ERS awards (especially 

after the adoption of the higher 750- 

employee size standard in 2016) are all 

indications that an additional increase 

to the ERS size standard is warranted. 

The large concentration of ERS awards 

among very large and diversified firms 

suggests that trimming the data is 

warranted to obtain a more 

representative picture of the ERS 

industry. Thus, to avoid the results 

being distorted by very large, diversified 

firms, SBA excluded from analysis 2.5% 

of the largest firms by the number of 

employees. That leaves the number of 

ERS firms at 937, which were used to 

calculate the industry and Federal 

contracting factors for the ERS 

exception. Table 8, Size Standards 

Supported by Each Factor for the 

Exception to NAICS 562910 

(Employees), below, summarizes the 

results. 

TABLE 8—SIZE STANDARDS SUPPORTED BY EACH FACTOR FOR THE EXCEPTION TO NAICS 562910 (EMPLOYEES) 

[Upper value = calculated factor, lower value = size standard supported] 

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) 

NAICS code NAICS industry title Type Simple 

average 

firm size 

(number of 

employees) 

Weighted 

average 

firm size 

(number of 

employees) 

Average 

assets 

size 

($ million) 

Four-firm 

ratio 

% 

Gini 

coefficient 

Federal 

contract 

factor 

(%) 

Calculated 

size 

standard 

(number of 

employees) 

Current size 

standard 

(Number of 

employees) 

562910 (Exception) .................... Factor ....... 174.9 3,249.0 $22.8 35.1 0.851 64.2 .................... ....................

Size Std ... 1,500 1,500 850 700 1,250 750 1,000 750 

Based on the above rationale and the 

analysis of industry and Federal 

contracting factors, SBA proposes to 

increase the ERS size standard to 1,000 

employees, which would cause a very 

minimal impact on currently small 

firms in the ERS Federal procurement 

market while allowing a few larger 

small firms an expanded runway to 

grow and remain competitive. SBA 

repeated this analysis without trimming 

the data, which yielded a calculated size 

standard of 1,200 employees; however, 

SBA does not believe that this method 

most accurately reflects the economic 

characteristics of firms primarily 

engaged in the business activities 

related to the ERS exception since the 

untrimmed data includes firms whose 

primary activity is unrelated to ERS. Of 

the 25 firms excluded from the analysis 

due to trimming, 12 firms had less than 

$1 million in ERS contracts. The share 

of ERS dollars obligated to these firms 


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was less than 0.1% in terms of both 

their total receipts and total dollars 

obligated (across all NAICS codes), 

indicating that the ERS exception is 

clearly not the primary activity for these 

firms. Also, among the remaining 13 

excluded firms that received more 

contract dollars under the ERS 

exception, these firms’ share of ERS 

dollars in their total receipts was, on 

average, only 1.2%, varying from 0.0% 

to 5.7%. SBA found that the vast 

majority of these excluded firms 

operated in numerous, diverse NAICS 

codes and none of them reported the 

ERS exception as being their primary 

activity relative to their overall 

operations. 

As such, SBA is proposing to increase 

the ERS size standard to 1,000 

employees in accordance with SBA’s 

size standards methodology and the 

trimming approach described above. As 

discussed previously in this subsection, 

in February 2016, SBA increased the 

size standard for the ERS exception 

from 500 employees to 750 employees. 

In fiscal years 2018–2019, still the 

largest number of small ERS firms were 

below 500 employees, receiving the 

largest percentage of ERS small business 

contract awards. By increasing the size 

standard to 1,000 employees, only about 

2 additional firms will gain small 

business status. SBA believes that this 

will not have a significant impact on 

small businesses below the current 750- 

employee size standard. 

Summary of Calculated Size Standards 

Of the 427 industries and 5 

subindustries (i.e., ‘‘exceptions’’) 

reviewed in this proposed rule, the 

results from analyses of the latest 

available data on the five primary 

factors discussed above would support 

increasing employee-based size 

standards for 157 industries and 2 

subindustries (‘‘exceptions’’), decreasing 

size standards for 216 industries, and 

maintaining size standards for 54 

industries and 3 subindustries 

(‘‘exceptions’’). Table 9, Summary of 

Calculated Size Standards, below, 

summarizes these results by NAICS 

sector. 

TABLE 9—SUMMARY OF CALCULATED SIZE STANDARDS

NAICS 

sector NAICS sector title 

Number of size 

standards 

reviewed 

Number of size 

standards 

increased 

Number of size 

standards 

decreased 

Number of size 

standards 

maintained 

21 ........................ Mining, Quarrying, and Oil and Gas Extraction.24 15 9 0 

22 ........................ Utilities ............................................................ 11 11 0 0 

31–33 .................. Manufacturing ................................................. 360 123 187 50 

48–49 .................. Transportation and Warehousing ................... 15 5 8 2 

51 ........................ Information ..................................................... 12 3 7 2 

54 ........................ Professional, Scientific and Technical Services.7 1 3 3 

Other ................... Agriculture, Forestry, Fishing and Hunting 

(Sector 11); Finance and Insurance (Sector 52); Administrative and Support, Waste 

Management and Remediation Services 

(Sector 56).

3 1 2 0 

Total ............. 432 159 216 57 

Evaluation of SBA Loan Data 

Before proposing or deciding on size 

standard revisions, SBA also considers 

the impact of size standards revisions 

on its loan programs. Accordingly, SBA 

examined its internal 7(a) and 504 loan 

data for fiscal years 2018–2020 to assess 

whether the calculated size standards in 

Table 4 (above) need further 

adjustments to ensure credit 

opportunities for small businesses 

through those programs. For the 

industries reviewed in this proposed 

rule, the data shows that it is mostly 

businesses much smaller than the 

current or calculated size standards that 

receive SBA’s 7(a) and 504 loans. For 

example, for industries covered by this 

rule, more than 99.0% of SBA’s 7(a) and 

504 loans in fiscal years 2018–2020 

went to businesses below the calculated 

size standards. 

Evaluation of Calculated Size Standards 

for Dominance in Field of Operation 

The Small Business Act provides that 

a small business concern must not be 

dominant in its field of operation. 

Accordingly, to ensure that neither an 

existing nor a calculated or proposed 

size standard includes the dominant or 

potentially dominant firms in any 

industry, besides the calculation of the 

Gini coefficient, SBA further assessed 

the distribution of firms in each 

industry by employee size and a firm’s 

share of total industry’s receipts at the 

existing or calculated size standard. 

Generally, SBA believes shares below 

40% would preclude dominant firms 

from qualifying as small and exerting 

control on any industry. Accordingly, 

based on the results, SBA is proposing 

to retain the size standards for nine 

industries at their current levels, even 

though the analytical results suggested 

that an increase is warranted. These 

industries include NAICS 212222, 

212291, 311213, 221116, 212113, 

212392, 311512, 316992, and 212324, 

for which a firm’s share of total 

industry’s receipts or employees at the 

calculated size standard was more than 

40%. SBA proposes to adopt a smaller 

increase to the size standard for NAICS 

221114 to ensure that the industry’s 

dominant firms are not included in the 

definition of small business for the 

industry. SBA estimates that at the 

calculated size standard of 700 

employees for NAICS 221114, based on 

the 2012 Economic Census data, a firm’s 

share of total industry receipts would be 

41.1% and the share of employees 

44.2%. Thus, SBA is proposing a 

smaller increase to the size standard for 

NAICS 221114 from the current 250 

employees to 500 employees to ensure 

that a firm’s share of total industry 

receipts or employees at the proposed 

size standard is not greater than 40%. 

These adjustments would affect only the 

one or two largest firms in each of those 

industries. Similarly, based on the 

results from dominance analysis using 


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24808 Federal Register / Vol. 87, No. 80 / Tuesday, April 26, 2022 / Proposed Rules 

the 2012 Economic Census data, SBA 

considered proposing to reduce the size 

standard for NAICS 221118 from 250 

employees to 100 employees, even 

though the analytical results supported 

a higher size standard of 650 employees. 

The results showed that the share of 

total receipts for a firm at the 250- 

employee current size standard or at the 

650-employee calculated size standard 

would be much higher than the 40% 

threshold. However, after considering 

the level of Federal contracting activity 

and the Federal contracting factor for 

this industry as presented in Table 4 

above, SBA proposes to adopt the 

calculated size standard of 650 

employees for NAICS 221118 as there 

are a number of large firms participating 

in Federal contracting in this industry 

that are not classified under NAICS 

221118 in the Economic Census data. 

Based on the FPDS–NG data for fiscal 

years 2018–2020, on an annual basis, 

SBA identified 131 firms receiving 443 

contracts under NAICS 221118. The 

average annual total dollars obligated to 

these firms was about $216.0 million. 

Together, these firms had total 

employees of 1.5 million, averaging 

11,771 employees. These figures are 

much greater than the total of 224 

employees and average of 14 employees 

for NAICS 221118 based on the 2012 

Economic Census data. Using the data 

from FPDS–NG for fiscal years 2018– 

2020 for NAICS 221118, SBA estimates 

the share of receipts of a firm at the 

calculated size standard of 650 

employees to be 0.07%, which 

effectively precludes a firm of this size 

from exerting control over the industry. 

Thus, these results demonstrate that the 

Economic Census Economic Census 

data for this industry do not correlate 

well with the Federal market data from 

FPDS–NG that supports a higher size 

standard. 

As explained elsewhere in this 

proposed rule, in industries 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 

respect to the Federal contracting factor. 

Regarding NAICS 221118 specifically, 

using the Federal market data for fiscal 

years 2016–2018, SBA estimated a 

Federal contracting factor of ¥64.4% 

(i.e., the difference between the small 

business share of Federal market and 

the small business share of industry 

receipts) that supports increasing the 

size standard to 400 employees (see 

Table 4 above). Using the FPDS–NG 

data from fiscal years 2018–2020, SBA 

estimates the small business share of 

dollars obligated to NAICS 221118 to be 

4.4% and the small business share of 

industry receipts, based on the 2012 

Economic Census data, to be 71.6%, 

thereby yielding a Federal contracting 

factor of ¥67.2%. 

Therefore, based on the reasons 

presented above, SBA is proposing to 

adopt the 650-employee calculated size 

standard for NAICS 221118 to further 

promote competition among all firms 

and create additional opportunities for 

small firms. Table 10, Proposed 

Adjustments to Calculated Size 

Standards Based on Dominance 

Analysis, below, summarizes 

adjustments to calculated size standards 

based on SBA’s evaluation of 

dominance in field of operation. 

TABLE 10—PROPOSED ADJUSTMENTS OF CALCULATED SIZE STANDARDS BASED ON DOMINANCE ANALYSIS

NAICS code NAICS industry title 

Current size 

standard 

(employees) 

Calculated 

size standard 

(employees) 

Adjusted/ 

proposed size 

standard 

(employees) 

212113 .............. Anthracite Mining .......................................................................................... 250 600 250 

212222 .............. Silver Ore Mining .......................................................................................... 250 1,100 250 

212291 .............. Uranium-Radium-Vanadium Ore Mining ...................................................... 250 900 250 

212324 .............. Kaolin and Ball Clay Mining ......................................................................... 750 1,050 750 

212392 .............. Phosphate Rock Mining ............................................................................... 1,000 1,350 1,000 

221114 .............. Solar Electric Power Generation .................................................................. 250 700 500 

221116 .............. Geothermal Electric Power Generation ........................................................ 250 1,050 250 

221118 .............. Other Electric Power Generation ................................................................. 250 650 650

311213 .............. Malt Manufacturing ....................................................................................... 500 900 500 

311512 .............. Creamery Butter Manufacturing ................................................................... 750 1,000 750 

316992 .............. Women’s Handbag and Purse Manufacturing ............................................. 750 850 750 

Special Considerations 

On March 13, 2020, the ongoing 

Coronavirus Disease 2019 (COVID–19) 

was declared a pandemic of enough 

severity and magnitude to warrant an 

emergency declaration for all U.S. 

states, territories, and the District of 

Columbia. With the COVID–19 

emergency, many small businesses 

nationwide experienced economic 

hardship as a direct result of the 

Federal, State, and local public health 

measures that were being taken to 

minimize the public’s exposure to the 

virus. In addition, based on the advice 

of public health officials, other 

measures, such as keeping a safe 

distance from others or even stay-athome orders, were implemented, 

resulting in a dramatic decrease in 

economic activity as the public avoided 

malls, retail stores, and other 

businesses. 

The Coronavirus Aid, Relief, and 

Economic Security Act (the CARES Act 

or the Act) (Pub. L. 116–136) was signed 

on March 27, 2020, to provide 

emergency assistance and health care 

response for individuals, families, and 

businesses affected by the coronavirus 

pandemic. Section 1102 of the Act 

temporarily permitted SBA to guarantee 

100% of 7(a) loans under a new program 

titled the Paycheck Protection Program 

(PPP). Section 1106 of the Act provides 

for forgiveness of up to the full principal 

amount of qualifying loans guaranteed 

under the PPP. The PPP and loan 

forgiveness are intended to provide 

economic relief to small businesses 

nationwide adversely impacted by 

COVID–19. On April 24, 2020, 

additional funding for the CARES Act, 

including for the PPP, was provided (see 

The Paycheck Protection Program and 

Health Care Enhancement Act, Pub. L. 

116–139). On December 27, 2020, 

Congress passed the Economic Aid to 

Hard-Hit Small Businesses, Nonprofits, 

and Venues Act as part of the 

Consolidation Appropriations Act, 

approving additional funding for the 

PPP loan program and allowing the 

hardest-hit small businesses to receive a 

second draw PPP loan (Pub. L. 116– 

260). Additionally, the law approved 

grants for shuttered-venue operators. On 

March 11, 2021, the American Rescue 

Plan Act of 2021 (Pub. L. 117–2) was 


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3Source: gdp4q21_3rd.pdf (bea.gov), March 30, 

2022. This report represents the BEA’s March 30, 

2022, full News Release on the U.S. Economic data 

for the fourth quarter of 2021 and year 2021, and 

associated figures and tables. Specifically included 

in the report are, among other things, GDP (third 

estimate), personal consumption expenditures 

(PCE), Corporate Profits, and GDP by industry for 

the fourth of 2021 and year 2021. Provided in the 

report are levels of various economic measures and 

percentage changes from preceding period. The 

report provides annual data for years 2019, 2020 

and 2021, and quarterly data from the first quarter 

of 2018 to the fourth quarter of 2021. 

signed into law. This act provided 

additional relief for the Nation’s small 

businesses and hard-hit industries by 

adding new support to the recovery 

effort, including additional funding for 

the PPP and the Shuttered Venue 

Operators Grant programs. The act also 

provided additional funding for targeted 

Economic Injury Disaster Loan (EIDL) 

Advance payments. 

The Agency is following closely the 

development of the pandemic and the 

economic situation. A variety of 

economic indicators such as the Gross 

Domestic Product (GDP) and the 

unemployment rate show that the 

economic recession from the COVID–19 

pandemic was significantly worse than 

any other recession since World War II. 

According to the Bureau of Economic 

Analysis (BEA), the real GDP decreased 

5.1%, and the real personal 

consumption in goods and services 

decreased 6.9% in the first quarter of 

2020. In the second quarter, the real 

GDP decreased 31.2% and the real 

personal consumption in goods and 

services decreased 33.4%. In the third 

quarter, the real GDP increased 33.8%, 

and the real personal consumption in 

goods and services increased 41.4%. 

The real GDP showed a more moderate 

increase of 4.5% and the real personal 

consumption expenditures increased 

3.4% in the fourth quarter of 2020. The 

real GDP decreased 3.4% in 2020 from 

2019 (from the 2019 annual level to the 

2020 annual level), compared with an 

increase of 2.3% in 2019 from 2018. The 

real GDP increased 6.3% in the first 

quarter of 2021 and 6.7% in the second 

quarter. The real personal consumption 

in goods and services grew 11.4% in the 

first quarter of 2021 and 12.0% in the 

second quarter. The growth rates of both 

the real GDP and real personal 

consumption expenditures slowed 

significantly in the third quarter, 

increasing just 2.3% and 2.0%, 

respectively. Economic growth 

accelerated in the fourth quarter, with 

real GDP and real personal consumption 

expenditures increasing 6.9% and 2.5%, 

respectively. The real GDP increased 

5.7% in 2021 from 2020 (from the 2020 

annual level to the 2021 annual level), 

compared with an decrease of 3.4% in 

2020 from 2019.3

In March 2022, the unemployment 

rate fell to 3.6%, and the number of 

unemployed persons to 6.0 million. 

Although both measures are 

significantly lower than their April 2020 

highs (14.8% and 23.1 million, 

respectively), they are still higher than 

their pre-pandemic levels in February 

2020 (3.5% and 5.7 million, 

respectively). Specifically, for the 

sectors evaluated in this proposed rule, 

in March 2022, the average 

unemployment rate was 3.4%. In 

February 2020, the average 

unemployment rate for these sectors 

was 3.8%. 

SBA believes that lowering size 

standards under the current economic 

environment could stifle the momentum 

of the ongoing economic recovery by 

causing a large number of currently 

small firms to become ineligible for 

SBA’s financial assistance and Federal 

contracting programs at a time when 

these programs could be particularly 

helpful to businesses in need of Federal 

assistance the most to survive the 

economic impacts of the ongoing 

COVID–19 pandemic. SBA is meeting 

the need for increased support by not 

lowering size standards even though 

analytical results suggest that some size 

standards might be lowered. Moreover, 

reducing the number of small 

businesses in the economy may also 

lead to fewer set-aside opportunities 

overall as it would reduce the pool of 

eligible firms that the Federal 

Government could select from when 

setting aside procurement opportunities 

for small businesses. Thus, SBA 

believes that lowering size standards at 

this time would be counter to its 

mission to aid, counsel, assist and 

protect the interests of small business 

concerns, preserve free competitive 

enterprise, and maintain and strengthen 

the overall economy of our Nation. 

Proposed Changes to Size Standards 

Based on the analytical results and 

SBA’s policy of not lowering size 

standards in response to the ongoing 

economic impacts of the COVID–19 

pandemic and Government response to 

mitigate the impacts discussed above, 

SBA proposes to increase size standards 

for 150 industries or subindustries (or 

‘‘exceptions’’) and retain the current 

size standards for 282 industries. The 

proposed size standards are presented 

in Table 11, Proposed Size Standards 

Revisions. Also presented in Table 11 

are current and calculated size 

standards for comparison. 

TABLE 11—PROPOSED SIZE STANDARDS REVISIONS

NAICS code NAICS industry title 

Current size 

standard 

(employees) 

Calculated 

size standard 

(employees) 

Proposed size 

standard 

(employees) 

212113 ........................... Anthracite Mining ............................................................................ 250 600 250 

212210 ........................... Iron Ore Mining ............................................................................... 750 1,400 1,400 

212222 ........................... Silver Ore Mining ............................................................................ 250 1,100 250 

212230 ........................... Copper, Nickel, Lead, and Zinc Mining .......................................... 750 1,400 1,400

212291 ........................... Uranium-Radium-Vanadium Ore Mining ......................................... 250 900 250 

212299 ........................... All Other Metal Ore Mining ............................................................. 750 1,250 1,250 

212313 ........................... Crushed and Broken Granite Mining and Quarrying ...................... 750 850 850 

212319 ........................... Other Crushed and Broken Stone Mining and Quarrying .............. 500 550 550 

212322 ........................... Industrial Sand Mining .................................................................... 500 750 750 

212324 ........................... Kaolin and Ball Clay Mining ............................................................ 750 1,050 750 

212325 ........................... Clay and Ceramic and Refractory Minerals Mining ........................ 500 650 650 

212391 ........................... Potash, Soda, and Borate Mineral Mining ...................................... 750 1,050 1,050 

212392 ........................... Phosphate Rock Mining .................................................................. 1,000 1,350 1,000 

212393 ........................... Other Chemical and Fertilizer Mineral Mining ................................ 500 600 600 

212399 ........................... All Other Nonmetallic Mineral Mining ............................................. 500 600 600 

221111 ........................... Hydroelectric Power Generation ..................................................... 500 750 750

221112 ........................... Fossil Fuel Electric Power Generation ........................................... 750 950 950 

221113 ........................... Nuclear Electric Power Generation ................................................ 750 1,150 1,150 


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TABLE 11—PROPOSED SIZE STANDARDS REVISIONS—Continued 

NAICS code NAICS industry title 

Current size 

standard 

(employees) 

Calculated 

size standard 

(employees) 

Proposed size 

standard 

(employees) 

221114 ........................... Solar Electric Power Generation .................................................... 250 700 500

221115 ........................... Wind Electric Power Generation ..................................................... 250 1,150 1,150 

221116 ........................... Geothermal Electric Power Generation .......................................... 250 1,050 250 

221117 ........................... Biomass Electric Power Generation ............................................... 250 550 550 

221118 ........................... Other Electric Power Generation .................................................... 250 650 650

221121 ........................... Electric Bulk Power Transmission and Control .............................. 500 950 950 

221122 ........................... Electric Power Distribution .............................................................. 1,000 1,100 1,100 

221210 ........................... Natural Gas Distribution .................................................................. 1,000 1,150 1,150 

311111 ........................... Dog and Cat Food Manufacturing .................................................. 1,000 1,250 1,250 

311119 ........................... Other Animal Food Manufacturing .................................................. 500 650 650 

311211 ........................... Flour Milling ..................................................................................... 1,000 1,050 1,050 

311212 ........................... Rice Milling ...................................................................................... 500 750 750 

311213 ........................... Malt Manufacturing ......................................................................... 500 900 500 

311221 ........................... Wet Corn Milling ............................................................................. 1,250 1,300 1,300 

311224 ........................... Soybean and Other Oilseed Processing ........................................ 1,000 1,250 1,250 

311225 ........................... Fats and Oils Refining and Blending .............................................. 1,000 1,100 1,100 

311230 ........................... Breakfast Cereal Manufacturing ..................................................... 1,000 1,300 1,300 

311313 ........................... Beet Sugar Manufacturing .............................................................. 750 1,150 1,150 

311314 ........................... Cane Sugar Manufacturing ............................................................. 1,000 1,050 1,050 

311411 ........................... Frozen Fruit, Juice, and Vegetable Manufacturing ........................ 1,000 1,100 1,100 

311422 ........................... Specialty Canning ........................................................................... 1,250 1,400 1,400 

311511 ........................... Fluid Milk Manufacturing ................................................................. 1,000 1,150 1,150 

311512 ........................... Creamery Butter Manufacturing ...................................................... 750 1,000 750 

311514 ........................... Dry, Condensed, and Evaporated Dairy Product Manufacturing ... 750 1,000 1,000 

311611 ........................... Animal (except Poultry) Slaughtering ............................................. 1,000 1,150 1,150 

311824 ........................... Dry Pasta, Dough, and Flour Mixes Manufacturing from Purchased Flour.750 850 850 

311920 ........................... Coffee and Tea Manufacturing ....................................................... 750 1,000 1,000 

311930 ........................... Flavoring Syrup and Concentrate Manufacturing ........................... 1,000 1,100 1,100 

311941 ........................... Mayonnaise, Dressing, and Other Prepared Sauce Manufacturing 750 850 850 

311942 ........................... Spice and Extract Manufacturing .................................................... 500 650 650

311991 ........................... Perishable Prepared Food Manufacturing ...................................... 500 700 700 

311999 ........................... All Other Miscellaneous Food Manufacturing ................................. 500 700 700 

312111 ........................... Soft Drink Manufacturing ................................................................ 1,250 1,400 1,400 

312112 ........................... Bottled Water Manufacturing .......................................................... 1,000 1,100 1,100 

312140 ........................... Distilleries ........................................................................................ 1,000 1,100 1,100 

313220 ........................... Narrow Fabric Mills and Schiffli Machine Embroidery .................... 500 550 550 

313230 ........................... Nonwoven Fabric Mills .................................................................... 750 850 850 

314999 ........................... All Other Miscellaneous Textile Product Mills ................................ 500 550 550 

315190 ........................... Other Apparel Knitting Mills ............................................................ 750 850 850 

315990 ........................... Apparel Accessories and Other Apparel Manufacturing ................ 500 600 600 

316110 ........................... Leather and Hide Tanning and Finishing ....................................... 500 800 800 

316992 ........................... Women’s Handbag and Purse Manufacturing ................................ 750 850 750 

321113 ........................... Sawmills .......................................................................................... 500 550 550 

321114 ........................... Wood Preservation ......................................................................... 500 550 550 

321211 ........................... Hardwood Veneer and Plywood Manufacturing ............................. 500 600 600 

322110 ........................... Pulp Mills ......................................................................................... 750 1,050 1,050 

322122 ........................... Newsprint Mills ................................................................................ 750 1,050 1,050 

323111 ........................... Commercial Printing (except Screen and Books) .......................... 500 650 650 

323120 ........................... Support Activities for Printing ......................................................... 500 550 550 

324122 ........................... Asphalt Shingle and Coating Materials Manufacturing .................. 750 1,100 1,100 

324191 ........................... Petroleum Lubricating Oil and Grease Manufacturing ................... 750 900 900 

324199 ........................... All Other Petroleum and Coal Products Manufacturing ................. 500 950 950 

325110 ........................... Petrochemical Manufacturing ......................................................... 1,000 1,300 1,300 

325120 ........................... Industrial Gas Manufacturing .......................................................... 1,000 1,200 1,200 

325130 ........................... Synthetic Dye and Pigment Manufacturing .................................... 1,000 1,050 1,050 

325220 ........................... Artificial and Synthetic Fibers and Filaments Manufacturing ......... 1,000 1,050 1,050 

325311 ........................... Nitrogenous Fertilizer Manufacturing .............................................. 1,000 1,050 1,050 

325312 ........................... Phosphatic Fertilizer Manufacturing ............................................... 750 1,350 1,350 

325314 ........................... Fertilizer (Mixing Only) Manufacturing ............................................ 500 550 550 

325320 ........................... Pesticide and Other Agricultural Chemical Manufacturing ............. 1,000 1,150 1,150 

325412 ........................... Pharmaceutical Preparation Manufacturing .................................... 1,250 1,300 1,300 

325520 ........................... Adhesive Manufacturing ................................................................. 500 550 550 

325611 ........................... Soap and Other Detergent Manufacturing ..................................... 1,000 1,100 1,100 

325612 ........................... Polish and Other Sanitation Good Manufacturing .......................... 750 900 900 

325613 ........................... Surface Active Agent Manufacturing .............................................. 750 1,100 1,100 

325910 ........................... Printing Ink Manufacturing .............................................................. 500 750 750 

325991 ........................... Custom Compounding of Purchased Resins ................................. 500 600 600 

325998 ........................... All Other Miscellaneous Chemical Product and Preparation Manufacturing.500 650 650 


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TABLE 11—PROPOSED SIZE STANDARDS REVISIONS—Continued 

NAICS code NAICS industry title 

Current size 

standard 

(employees) 

Calculated 

size standard 

(employees) 

Proposed size 

standard 

(employees) 

326121 ........................... Unlaminated Plastics Profile Shape Manufacturing ....................... 500 600 600 

326130 ........................... Laminated Plastics Plate, Sheet (except Packaging), and Shape 

Manufacturing.

500 650 650 

326220 ........................... Rubber and Plastics Hoses and Belting Manufacturing ................. 750 800 800 

326299 ........................... All Other Rubber Product Manufacturing ....................................... 500 650 650 

327211 ........................... Flat Glass Manufacturing ................................................................ 1,000 1,100 1,100 

327410 ........................... Lime Manufacturing ........................................................................ 750 1,050 1,050 

327910 ........................... Abrasive Product Manufacturing ..................................................... 750 900 900

327992 ........................... Ground or Treated Mineral and Earth Manufacturing .................... 500 600 600 

327999 ........................... All Other Miscellaneous Nonmetallic Mineral Product Manufacturing.500 750 750 

331313 ........................... Alumina Refining and Primary Aluminum Production .................... 1,000 1,300 1,300 

331315 ........................... Aluminum Sheet, Plate, and Foil Manufacturing ............................ 1,250 1,400 1,400 

331420 ........................... Copper Rolling, Drawing, Extruding, and Alloying ......................... 1,000 1,050 1,050 

331491 ........................... Nonferrous Metal (except Copper and Aluminum) Rolling, Drawing, and Extruding.750 900 900 

331492 ........................... Secondary Smelting, Refining, and Alloying of Nonferrous Metal 

(except Copper and Aluminum).

750 850 850 

331512 ........................... Steel Investment Foundries ............................................................ 1,000 1,050 1,050 

331513 ........................... Steel Foundries (except Investment) .............................................. 500 700 700 

331523 ........................... Nonferrous Metal Die-Casting Foundries ....................................... 500 700 700 

331524 ........................... Aluminum Foundries (except Die-Casting) ..................................... 500 550 550 

332112 ........................... Nonferrous Forging ......................................................................... 750 950 950 

332114 ........................... Custom Roll Forming ...................................................................... 500 600 600 

332117 ........................... Powder Metallurgy Part Manufacturing .......................................... 500 550 550 

332215 ........................... Metal Kitchen Cookware, Utensil, Cutlery, and Flatware (except 

Precious) Manufacturing.

750 1,000 1,000 

332439 ........................... Other Metal Container Manufacturing ............................................ 500 600 600 

332613 ........................... Spring Manufacturing ...................................................................... 500 600 600 

332722 ........................... Bolt, Nut, Screw, Rivet, and Washer Manufacturing ...................... 500 600 600 

332812 ........................... Metal Coating, Engraving (except Jewelry and Silverware), and 

Allied Services to Manufacturers.

500 600 600 

332992 ........................... Small Arms Ammunition Manufacturing ......................................... 1,250 1,300 1,300 

332996 ........................... Fabricated Pipe and Pipe Fitting Manufacturing ............................ 500 550 550 

333131 ........................... Mining Machinery and Equipment Manufacturing .......................... 500 900 900 

333243 ........................... Sawmill, Woodworking, and Paper Machinery Manufacturing ....... 500 550 550 

333314 ........................... Optical Instrument and Lens Manufacturing ................................... 500 600 600 

333924 ........................... Industrial Truck, Tractor, Trailer, and Stacker Machinery Manufacturing.750 900 900 

333991 ........................... Power-Driven Hand Tool Manufacturing ........................................ 500 950 950 

333993 ........................... Packaging Machinery Manufacturing .............................................. 500 600 600 

333995 ........................... Fluid Power Cylinder and Actuator Manufacturing ......................... 750 800 800 

333997 ........................... Scale and Balance Manufacturing .................................................. 500 700 700 

334290 ........................... Other Communications Equipment Manufacturing ......................... 750 800 800 

334416 ........................... Capacitor, Resistor, Coil, Transformer, and Other Inductor Manufacturing.500 550 550 

334511 ........................... Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing.1,250 1,350 1,350 

334512 ........................... Automatic Environmental Control Manufacturing for Residential, 

Commercial, and Appliance Use.

500 650 650 

334514 ........................... Totalizing Fluid Meter and Counting Device Manufacturing .......... 750 850 850 

334517 ........................... Irradiation Apparatus Manufacturing ............................................... 1,000 1,200 1,200 

334519 ........................... Other Measuring and Controlling Device Manufacturing ............... 500 600 600 

335122 ........................... Commercial, Industrial, and Institutional Electric Lighting Fixture 

Manufacturing.

500 600 600 

335129 ........................... Other Lighting Equipment Manufacturing ....................................... 500 550 550 

335311 ........................... Power, Distribution, and Specialty Transformer Manufacturing ..... 750 800 800 

335912 ........................... Primary Battery Manufacturing ....................................................... 1,000 1,300 1,300 

335931 ........................... Current-Carrying Wiring Device Manufacturing .............................. 500 600 600 

335991 ........................... Carbon and Graphite Product Manufacturing ................................. 750 900 900 

335999 ........................... All Other Miscellaneous Electrical Equipment and Component 

Manufacturing.

500 600 600 

336310 ........................... Motor Vehicle Gasoline Engine and Engine Parts Manufacturing 1,000 1,050 1,050 

336414 ........................... Guided Missile and Space Vehicle Manufacturing ......................... 1,250 1,300 1,300 

336419 ........................... Other Guided Missile and Space Vehicle Parts and Auxiliary 

Equipment Manufacturing.

1,000 1,050 1,050 

336611 ........................... Ship Building and Repairing ........................................................... 1,250 1,300 1,300 

336991 ........................... Motorcycle, Bicycle, and Parts Manufacturing ............................... 1,000 1,050 1,050 

337125 ........................... Household Furniture (except Wood and Metal) Manufacturing ..... 750 950 950 

337214 ........................... Office Furniture (except Wood) Manufacturing .............................. 1,000 1,100 1,100 


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TABLE 11—PROPOSED SIZE STANDARDS REVISIONS—Continued 

NAICS code NAICS industry title 

Current size 

standard 

(employees) 

Calculated 

size standard 

(employees) 

Proposed size 

standard 

(employees) 

339113 ........................... Surgical Appliance and Supplies Manufacturing ............................ 750 800 800 

339910 ........................... Jewelry and Silverware Manufacturing ........................................... 500 700 700 

339930 ........................... Doll, Toy, and Game Manufacturing ............................................... 500 700 700 

339991 ........................... Gasket, Packing, and Sealing Device Manufacturing .................... 500 600 600 

339994 ........................... Broom, Brush, and Mop Manufacturing .......................................... 500 750 750 

339999 ........................... All Other Miscellaneous Manufacturing .......................................... 500 550 550 

483111 ........................... Deep Sea Freight Transportation ................................................... 500 1,050 1,050 

483113 ........................... Coastal and Great Lakes Freight Transportation ........................... 750 800 800 

483114 ........................... Coastal and Great Lakes Passenger Transportation ..................... 500 550 550 

483211 ........................... Inland Water Freight Transportation ............................................... 750 1,050 1,050 

483212 ........................... Inland Water Passenger Transportation ......................................... 500 550 550 

511199 ........................... All Other Publishers ........................................................................ 500 550 550 

512230 ........................... Music Publishers ............................................................................. 750 900 900 

512250 ........................... Record Production and Distribution ................................................ 250 900 900 

541715 (Exception 3) ..... Guided Missiles and Space Vehicles, Their Propulsion Units and 

Propulsion Parts.

1,250 1,300 1,300 

562910 (Exception) ........ Environmental Remediation Services ............................................. 750 1,000 1,000 

As shown in the above table, SBA 

proposes to increase size standards for 

150 industries or subindustries 

(‘‘exceptions’’) in those sectors, 

including 10 industries in NAICS Sector 

21 (Mining, Quarrying, and Oil and Gas 

Extraction), 10 industries in NAICS 

Sector 22 (Utilities), 120 industries in 

NAICS Sector 31–33 (Manufacturing), 5 

industries in Sector 48–49 

(Transportation and Warehousing), 3 

industries in NAICS Sector 51 

(Information), and 1 subindustry (or 

‘‘exception’’) each in NAICS Sector 54 

(Professional, Scientific and Technical 

Services) and in NAICS Sector 56 

(Administrative and Support, Waste 

Management and Remediation 

Services). Table 12, Summary of 

Proposed Size Standards Revisions by 

Sector, below, summarizes the proposed 

changes to size standards by NAICS 

sector. 

TABLE 12—SUMMARY OF PROPOSED SIZE STANDARDS REVISIONS BY SECTOR

Sector Sector name 

Number of 

size standards 

reviewed 

Number of 

size standards 

increased 

Number of 

size standards 

decreased 

Number of 

size standards 

maintained 

21 ......................... Mining, Quarrying, and Oil and Gas Extraction ............ 24 10 0 14 

22 ......................... Utilities ........................................................................... 11 10 0 1 

31–33 ................... Manufacturing ................................................................ 360 120 0 240 

48–49 ................... Transportation and Warehousing .................................. 15 5 0 10 

51 ......................... Information ..................................................................... 12 3 0 9 

54 ......................... Professional, Scientific and Technical Services ............ 7 1 0 6 

Other Sectors ...... Agriculture, Forestry, Fishing and Hunting; Finance 

and Insurance; Administrative and Support, Waste 

Management and Remediation Services.

3 1 0 2 

Total .............. ........................................................................................ 432 150 0 282 

Evaluation of Proposed Size Standards 

for Dominance in Field of Operation 

For the vast majority of industries 

with proposed changes to size 

standards, the share of receipts of a firm 

at the proposed size standard levels in 

Table 11 (above) is, on average, 8.9%, 

varying from 0.2% to 38.9%. Generally, 

SBA believes shares below 40% would 

preclude dominant firms from 

qualifying as small and exerting control 

on any industry. Based on the results 

from the 2012 Economic Census data, 

only two industries had those shares 

above 40% at their proposed size 

standards levels, namely NAICS 221118 

(Other Electric Power Generation) and 

NAICS 311213 (Malt Manufacturing). 

SBA proposes to increase the size 

standard for NAICS 221118 from 250 

employees to 650 employees and to 

retain the current 500-employee size 

standard for NAICS 311213 although the 

industry data supported a higher 900- 

employee size standard. 

Regarding NAICS 221118, as 

discussed in the Evaluation of 

Calculated Size Standards for 

Dominance in Field of Operation 

section above, after considering the 

level of Federal contracting activity and 

the Federal contracting factor for this 

industry, SBA is proposing to adopt the 

calculated size standard of 650 

employees. Based on the Economic 

Census data, SBA estimated the share of 

industry receipts of a firm with 650 

employees to be above 40%, suggesting 

that a dominant firm may qualify as 

small at the proposed size standard 

level. However, considering the 

limitation of the Economic Census data 

in characterizing the firms that 

participate in the Federal market in 

NAICS 221118, SBA estimates, using 

the data from FPDS–NG for fiscal years 

2018–2020, the share of receipts of a 

firm at the proposed size standard of 

650 employees to be 0.07%, which 

would effectively preclude a firm of this 

size from being dominant and exerting 

control over the industry. 

Regarding NAICS 311213, SBA 

evaluated the industry’s distribution of 

firms by employee size to determine 

whether any potentially dominant firms 


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4On November 2, 2021, SBA issued a proposed 

rule implementing section 863 of the National 

Defense Authorization Act for Fiscal Year 2021, 

Public Law 116–283, which changed the averaging 

period for calculating employees for SBA’s 

employee-based size standards from 12 months to 

24 months (86 FR 60396 (November 2, 2021)). 

existed near the proposed size standard 

level. SBA identified only 1 firm close 

to or around the proposed 500-employee 

size standard and determined that this 

firm is not dominant in its field of 

operation because its share of total 

industry receipts is only 26.5%, well 

below the 40% threshold that SBA 

considers for adjusting calculated or 

proposed size standards to exclude 

dominant firms. Thus, SBA determined 

that the market shares under the 

proposed size standards revisions for all 

industries effectively preclude a firm at 

or below the proposed size standards 

from exerting control on any of the 

industries. In the Request for Comments 

section below, SBA seeks comments on 

its proposed revisions to size standards, 

including its proposal to, based on the 

results from dominance analysis, retain 

the current size standards in certain 

industries for which analytical results 

supported higher size standards. 

Alternatives Considered 

By law, SBA is required to develop 

numerical size standards for 

establishing eligibility for Federal small 

business assistance programs and to 

review every five years all size 

standards and make necessary 

adjustments to reflect the current 

industry structure and Federal market 

conditions. Other than varying the 

levels of size standards by industry and 

changing the measures of size standards 

(e.g., using annual receipts vs. the 

number of employees), no practical 

alternatives exist to the systems of 

numerical size standards. 

In response to the unprecedented 

economic impacts of the ongoing 

COVID–19 pandemic on small 

businesses and Government response, 

SBA is proposing to increase size 

standards where the data suggested 

increases are warranted, and to retain, 

in response to the COVID–19 pandemic 

and resultant economic impacts on 

small businesses, all current size 

standards where the data suggested 

lowering is appropriate. SBA is also 

retaining all current size standards 

where the data suggested no changes to 

the current size standards. 

Nonetheless, SBA considered two 

other alternatives. Alternative Option 

One was to propose changes exactly as 

suggested by the analytical results, 

including the evaluation of dominance 

in field of operation. In other words, 

Alternative Option One would entail 

increasing size standards for 150 

industries or subindustries 

(‘‘exceptions’’), decreasing for 216 

industries, and retaining at their current 

levels for 66 industries. Alternative 

Option Two was to retain all current 

size standards, even though the 

analytical results suggested that changes 

are warranted. 

SBA did not propose Alternative 

Option One, because it would cause, if 

adopted, a substantial number of 

currently small businesses to lose their 

small business status and hence to lose 

their eligibility for 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 also run counter to 

various measures the Federal 

Government has implemented to help 

small businesses and the overall 

economy recover from the ongoing 

COVID–19 pandemic. Considering the 

impacts of the Great Recession and 

Government actions that followed to 

support small businesses and the overall 

economy, SBA also adopted a general 

policy of not decreasing size standards 

during the first five-year review of size 

standards, even though the data 

supported decreases. 

As part of Alternative Option One, 

SBA also considered increasing 150 size 

standards as suggested by the analytical 

results and mitigating the impact of 

decreases to 216 size standards by 

adjusting the calculated size standards 

to minimize the impact on small 

business access to Federal contracts and 

SBA’s loans. However, considering the 

impact of the ongoing COVID–19 

pandemic on businesses and the overall 

economy, in the Regulatory Impact 

Analysis section (below), SBA presents 

the impacts of adopting the analytical 

results without adjustment to 

Alternative Option One and proposes to 

retain all size standards for which the 

evaluation of principal industry and 

Federal contracting factors suggested 

reductions, and to adopt only the 

increases based on the analytical results. 

Under Alternative Option Two, given 

the current COVID–19 pandemic and 

resultant uncertainty, SBA considered 

retaining all size standards at their 

current levels even though the 

analytical results supported changes. 

Under this option, as the current 

situation evolves, SBA would 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 

because the results discussed in the 

Regulatory Impact Analysis section 

show that retaining all size standards at 

their current levels would cause the 

otherwise qualified small businesses to 

forgo various small business benefits 

becoming available to them under the 

SBA’s proposal of increasing 150 and 

retaining 282 size standards. 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. 

Federal Procurement Size Standard for 

Nonmanufacturers 

Small business concerns must meet 

certain requirements when they offer to 

the Government an end item they did 

not manufacture, process, or produce. 

These requirements are known as the 

nonmanufacturer rule. The 

nonmanufacturer rule is codified in 

SBA’s small business size regulations at 

13 CFR 121.406. 

To qualify for a Federal Government 

supply contract set aside for small 

business, a nonmanufacturer must have 

an average of 500 or fewer employees 

over the past 12 months, be primarily 

engaged in the wholesale or retail trade 

activities, and supply the product of a 

U.S. small manufacturer.4 Under SBA’s 

regulation, NAICS codes in Wholesale 

Trade (Sector 42) and Retail Trade 

(Sector 44–45) sectors cannot be used 

for classifying Federal Government 

acquisitions of supplies or products. 

Instead, the applicable manufacturing 

NAICS code associated with 

manufacturing, production, or 

processing of the product being 

procured must be used. For other 

purposes, such as SBA’s financial 

assistance programs, SBA uses industrybased size standards in Sectors 42 and 

44–45 to determine eligibility of 

applicants in those sectors. In effect, the 

nonmanufacturer rule has resulted in 

two sets of size standards for industries 

in NAICS Sectors 42 and 44–45— 

industry-based size standards for SBA’s 

financial assistance and other Federal 

non-procurement programs and 500- 

employee size standard for Federal 

procurement programs under the 

nonmanufacturer rule. 

SBA believes that, for purposes of 

determining eligibility for Federal setaside procurement opportunities, using 

a single size standard is more 

appropriate than separate industrybased size standards for Wholesale or 

Retail Trade firms because firms in 

these sectors generally offer multiple 

products from different industries, and 

therefore identify themselves with 

multiple NAICS codes across a wide 


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spectrum of products and supplies. 

Thus, different size standards for 

individual industries in Wholesale 

Trade and Retail Trade under the 

nonmanufacturer rule would further 

complicate the contracting process, 

which already entails the decision to 

establish an applicable manufacturing 

NAICS code, along with its size 

standard, associated with 

manufacturing, production, or 

processing of the product being 

procured. Businesses and contracting 

officers would likely find it confusing if 

the principal NAICS code for a 

solicitation could vary based on factors 

other than the requirements prescribed 

at 13 CFR 121.402(b), which requires 

contracting officers to categorize 

solicitations by selecting the single 

NAICS code that best describes the 

principal purpose of the product being 

acquired. 

While the nonmanufacturer rule 

applies to firms primarily engaged in 

business activities within Sectors 42 

and 44–45, SBA did not review the 500- 

employee nonmanufacturer size 

standard in a recently published 

proposed rule, which reviewed 

industry-based size standards in Sectors 

42 and 44–45 (86 FR 28012 (May 5, 

2021)). In that proposed rule, SBA 

proposed to retain the nonmanufacturer 

size standard at 500 employees. 

Accordingly, in this proposed rule, SBA 

is examining whether the current 500- 

employee size standard for 

nonmanufacturers is appropriate. SBA 

received a total of nine comments to its 

May 5, 2021, proposed rule, one of 

which was submitted by Members of the 

U.S. House of Representatives 

Subcommittee on Contracting and 

Infrastructure requesting that SBA 

evaluate the current 500-employee size 

standard under the nonmanufacturer 

rule. Specifically, they expressed 

concern that because the level of 

revenues is immaterial to the 

determination of size under the 500- 

employee nonmanufacturer size 

standard, the current rule may allow a 

firm with billions of dollars in revenues 

to qualify as a small business. They 

suggested that SBA conduct an 

assessment of the nonmanufacturing 

industry based on revenue and/or other 

factors to determine what may be 

considered small for the size of a 

business qualifying as a 

nonmanufacturer. 

In response to the Congressional 

comment, SBA analyzed the size 

standard applicable to 

nonmanufacturers under the 

nonmanufacturer rule by comparing the 

employee-based average industry factors 

(i.e., average firm size, average assets, 

industry concentration, and distribution 

of firms by size) of all Wholesale Trade 

and Retail Trade industries combined 

with those of the manufacturing 

industries using the SBA’s ‘‘Size 

Standards Methodology’’ for employeebased size standards. SBA believes this 

approach is logical because Wholesale 

Trade and Retail Trade firms have to 

compete with manufacturers for supply 

or product contracts set aside for small 

businesses. Since NAICS codes in the 

Wholesale Trade and Retail Trade 

sectors cannot be used to classify 

Government acquisitions for supplies, 

and only the applicable manufacturing 

code can be applied (13 CFR 

121.402(b)(2)), the Federal contracting 

factor is not considered in evaluating 

industry-based size standards in these 

sectors. 

The analytical results, presented in 

Table 13, Size Standards Supported by 

Each Factor for Nonmanufacturers 

(Employees), below, support raising the 

size standard for nonmanufacturers 

from 500 employees to 550 employees. 

However, to maintain continuity with 

general public familiarity with and long 

acceptability of the 500-employee size 

standard, SBA is proposing to maintain 

the current 500-employee size standard 

which, in practice, continues to work 

well for the majority of firms to which 

it applies. Moreover, the 500-employee 

size standard is also the most common 

size standard among the manufacturing 

industries. It is a common practice for 

manufacturers to bid on supply 

contracts where they do not propose to 

produce the particular product to be 

supplied with their own labor force, 

notwithstanding that they are capable of 

doing so. Such manufacturers must 

qualify as small businesses under the 

nonmanufacturer rule. Therefore, in an 

effort to minimize the adverse 

consequences upon such concerns and 

promote fair competition among 

manufacturers and nonmanufacturers, 

SBA is proposing to adopt the 

predominant 500-employee size 

standard for manufacturers as the size 

standard for nonmanufacturers who 

desire to bid on Federal supply 

contracts. 

TABLE 13—SIZE STANDARDS SUPPORTED BY EACH FACTOR FOR NONMANUFACTURERS (EMPLOYEES) 

[Upper value = calculated factor, lower value = size standard supported] 

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) 

NAICS code/NAICS sector title Type Simple 

average firm 

size 

(employees) 

Weighted 

average firm 

size 

(employees) 

Average 

assets size 

($ million) 

Four-firm 

ratio 

(%) 

Gini 

coefficient 

Federal 

contract 

factor 

(%) 

Calculated 

size 

standard 

Proposed 

size 

standard 

Wholesale Trade (Sector 42) & 

Retail Trade (Sector 44–45).

Factor .......

Size Std ...

21.1 

450 

63.3 

400 

$4.1 

400 

4.2 

250 

0.828 

1,050 

....................

....................

....................

550 

....................

500 

SBA also evaluated the size standard 

for nonmanufacturers by comparing the 

average receipts-based industry factors 

of all Wholesale Trade and Retail Trade 

industries combined with those of 

receipts-based industries to calculate a 

receipt-based size standard for 

nonmanufacturers. SBA calculated a 

receipts-based size standard for all 

industries in Wholesale Trade and 

Retail Trade combined to be $27.0 

million. Although SBA has evaluated a 

receipt-based size standard for 

nonmanufacturers, SBA believes that 

adopting a receipts-based size standard 

instead of an employee-based size 

standard would be inappropriate for 

several reasons. Specifically, the Small 

Business Act provides that the size of 

manufacturing firms be based on the 

number of employees and that the size 

of services firms be based on average 

annual receipts. Adopting a receiptsbased size standard under the 

nonmanufacturer rule, which currently 

applies only to Government acquisitions 

for supplies, would cause many 

manufacturing concerns supplying 

products to the Government as 

nonmanufacturers under the 

nonmanufacturer rule to be evaluated 

under a receipts-based size standard. 

This would be contrary to the 

requirements of the Small Business Act. 

Moreover, based on data from the 

2012 Economic Census, SBA 

determined that under the calculated 

$27.0 million receipt-based size 

standard, a significant number of firms 

would lose their small business status 

that they currently have under the 500- 

employee nonmanufacturer size 


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standard. SBA estimates that only 

95.3% of the 975,625 firms in the 

Wholesale Trade and Retail Trade 

sectors would qualify as small under the 

$27.0 million receipts-based size 

standard whereas 99.1% of firms qualify 

as small under the current 500- 

employee nonmanufacturer size 

standard. Even if SBA were to adopt the 

maximum receipts-based size standard 

of $41.5 million as the size standard for 

nonmanufacturers, only 96.6% of firms 

in the Wholesale Trade and Retail Trade 

sectors would qualify as small. Thus, 

SBA believes that adopting a receiptsbased size standard could cause 

thousands of firms to lose their small 

business status and may likely lead to 

fewer set-aside opportunities for all 

small businesses since it would reduce 

the pool of eligible small firms that the 

Federal Government could select from 

when setting aside procurement of 

supplies for small businesses. 

Regarding the concern that firms with 

large revenues are eligible to receive 

small business set-aside contracts under 

the nonmanufacturer rule, SBA notes 

that revenues are not germane to the 

calculation of size for firms subject to 

SBA’s employee-based size standards. 

Likewise, the number of employees is 

not germane to the calculation of size 

for firms subject to SBA’s receipts-based 

size standards. Thus, firms under any 

size standard may argue that the size 

threshold for their industry is unfair 

because it may allow large firms under 

the non-germane measure of size to 

compete as a small business. However, 

SBA’s selection of size measure is not 

discretionary for most industries. As 

stated previously, the Small Business 

Act provides that the size of 

manufacturing firms be based on the 

number of employees and that the size 

of services firms be based on average 

annual receipts. The choice of a size 

measure for an industry also depends on 

which measure that best represents the 

magnitude of operations of a business 

concern. That is, the measure should 

account for the level of real business 

activity generated by firms in the 

industry. Generally, SBA prefers 

employees as a measure of size in 

industries that are highly capital 

intensive, horizontally structured, or 

have low operational costs relative to 

receipts. When applied to the subset of 

firms participating in the Federal 

contracting market as 

nonmanufacturers, these considerations, 

when taken together, support an 

employee-based size standard for 

nonmanufacturers. However, although 

SBA proposes to retain the current 500- 

employee size standard for 

nonmanufacturers participating in the 

Federal contracting market, in the 

Request for Comments section below, 

SBA requests comments on the 

appropriateness of the current 500- 

employee size standard and suggestions 

for alternative measures to an employeebased size standard that would be more 

appropriate for size determination of 

nonmanufacturers. 

Request for Comments 

SBA invites public comments on 

proposed size standards in this 

proposed rule, especially focusing on 

the following issues: 

1. SBA seeks feedback on whether 

SBA’s proposal to increase 150 

employee-based size standards and 

retain 282 employee-based size 

standards is appropriate given the 

results from the latest available industry 

and Federal contracting data of each 

industry and subindustry (‘‘exception’’) 

reviewed in this proposed rule, along 

with ongoing uncertainty and impact on 

the economic activity due to the 

COVID–19 pandemic. SBA also seeks 

suggestions, along with supporting facts 

and analysis, for alternative size 

standards, if they would be more 

appropriate than the proposed size 

standards in this rule. 

2. SBA seeks comments on whether 

SBA should retain size standards in 

view of the COVID–19 pandemic and its 

adverse impacts on small businesses as 

well as on the overall economy when 

the analytical results suggest they could 

be lowered. SBA believes that lowering 

size standards under the current 

economic environment would run 

counter to what Congress and the 

Federal Government are doing to aid 

and provide relief to the Nation’s small 

businesses impacted by the COVID–19 

pandemic. 

3. SBA seeks feedback on whether 

SBA’s proposal to maintain the current 

500-employee size standard under the 

nonmanufacturer rule is appropriate 

given the results from the latest 

available industry data. SBA also seeks 

suggestions, along with supporting facts 

and analysis, on alternative size 

standards, such as annual receipts or a 

different level of employees, if they 

would be more appropriate than the 

current and proposed 500-employee size 

standard for nonmanufacturers. SBA 

also invites input on whether the 

Agency should allow the use of 

industry-based size standards in 

Wholesale Trade and Retail Trade 

sectors to define whether a wholesaler 

or retailer is a small business concern 

for the acquisition of supplies. 

4. In calculating the overall industry 

size standard, SBA has assigned equal 

weight to each of the five primary 

factors in all industries and 

subindustries covered by this proposed 

rule. SBA seeks feedback on whether it 

should assign equal weight to each 

factor or on whether it should give more 

weight to one or more factors for certain 

industries or subindustries. 

Recommendations to weigh some 

factors differently than others should 

include suggested weights for each 

factor along with supporting facts and 

analysis. 

5. SBA seeks comments on the 

appropriateness of its proposal to, based 

on the results from dominance analysis, 

retain current size standards in certain 

industries for which analytical results 

supported increases. For those 

industries, based on the data from the 

2012 Economic Census, the share of 

industry receipts of a firm at the 

calculated size standard level was above 

the 40% threshold that SBA generally 

uses in determining whether the 

proposed or calculated size standard for 

the industry would include a dominant 

or potentially dominant firm qualifying 

as small. SBA invites industry analyses 

or suggestions for sources of more recent 

data that would show changes in 

industry structure, including a firm’s 

share of industry receipts at various size 

thresholds. 

6. Line Haul Railroads (NAICS 

482111) and Short Line Railroads 

(NAICS 482112) are not covered by the 

Economic Census. Based on the 

evaluation of economic characteristics 

of these industries using the data from 

the Railroad Retirement Board (RRB) 

and American Short Line and Regional 

Railroad Association (ASLRRA), SBA is 

proposing to retain the current 1.500- 

employee size standard for both NAICS 

482111 and 482112. SBA invites 

comments, along with supporting 

information, on this proposal as well as 

sources of data that more clearly define 

the economic characteristics of these 

industries. 

7. The Economic Census tabulation 

does not provide the data to evaluate the 

size standard for the Information 

Technology Value Added Resellers 

(ITVAR) exception to NAICS 541519 

(Other Computer Related Services). 

Based on the analysis of the FPDS–NG 

and SAM data, SBA is proposing to 

retain the current 150-employee size 

standard for the ITVAR exception. SBA 

invites comments, along with 

supporting information, on this 

proposal as well as suggestions for 

alternative sources of data that more 

clearly define the economic 

characteristics of ITVARs. 

8. Finally, SBA seeks comments on 

data sources it used to examine industry 


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and Federal market conditions, as well 

as suggestions on relevant alternative 

data sources that the Agency should 

evaluate in reviewing or modifying size 

standards for industries or subindustries 

covered by this proposed rule. 

Public comments on the above issues 

are very valuable to SBA for validating 

its proposed size standards revisions in 

this proposed rule. Commenters 

addressing size standards for a specific 

industry or a group of industries should 

include relevant data and/or other 

information supporting their comments. 

If comments relate to the application of 

size standards for Federal procurement 

programs, SBA suggests that 

commenters provide information on the 

size of contracts in their industries, the 

size of businesses that can undertake the 

contracts, start-up costs, equipment, and 

other asset requirements, the amount of 

subcontracting, other direct and indirect 

costs associated with the contracts, the 

use of mandatory sources of supply for 

products and services, and the degree to 

which contractors can mark up those 

costs. 

Compliance With Executive Order 

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 

proposed 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 proposed rule, 

including: (1) A statement of the need 

for the proposed action, (2) An 

examination of alternative approaches, 

and (3) An evaluation of the benefits 

and costs—both quantitative and 

qualitative—of the proposed 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 proposed 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 

proposed size standards revisions for 

industries being reviewed in this 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 proposed revisions to the existing 

employee-based size standards for 150 

industries or subindustries (or 

‘‘exceptions’’), including 120 industries 

in Sector 31–33 and 30 industries and 

subindustries in other sectors are 

consistent with SBA’s statutory 

mandates 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 are able to 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 

proposed regulatory changes and their 

alternatives. 

Proposed Changes to Size Standards 

Based on the results from the analyses 

of the latest industry and Federal 

contracting data, as well as 

consideration of 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 432 industries 

and subindustries (or ‘‘exceptions’’) in 

Sector 31–33 and other sectors that have 

employee-based size standards, SBA 

proposes to increase size standards for 

150 industries or subindustries 

(‘‘exceptions’’) and maintain current 

size standards for the remaining 282 

industries or subindustries 

(‘‘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 proposed 

changes to size standards on small 

businesses and on the overall economy. 

Based on the 2012 Economic Census 

(the latest available when this proposed 

rule was prepared), of a total of about 

337,524 businesses in industries in 

Sectors 31–33 and other sectors with 

employee-based size standards, 96.9% 

are considered small under the current 

size standards. That percentage varies 

from 86.1% in NAICS Sector 22 to 

99.8% in Sector 11. Based on the data 

from FPDS–NG for fiscal years 2018– 

2020, about 43,168 unique firms in 

those industries received at least one 

Federal contract during that period, of 

which 83.6% were small under the 

current size standards. A total of $231 

billion in average annual contract 

dollars were awarded to businesses in 

those industries during the period of 

evaluation, and 18.6% of the dollars 

awarded went to small businesses. For 

industries and subindustries 

(‘‘exceptions’’) reviewed in this 

proposed rule, providing contract 


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5The 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 presented 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. 

dollars to small business through setasides is quite important. From the total 

small business contract dollars awarded 

during the period considered, 47.1% 

were awarded through various small 

business set-aside programs and 52.9% 

were awarded through non-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 4,997 7(a) and 504 loans in 

that period, totaling about $3.1 billion, 

of which 75.7% was issued through the 

7(a) program and 24.3% was issued 

through the 504/CDC program. During 

fiscal years 2018–2020, small businesses 

in those industries also received 243 

loans through the SBA’s Economic 

Injury Disaster Loan (EIDL) program, 

totaling about $10.7 million on an 

annual basis.5 Table 14, Baseline for All 

Industries, below, provides these 

baseline results by Manufacturing 

(Sector 31–33) and all other sectors. 

TABLE 14—BASELINE FOR ALL INDUSTRIES UNDER CURRENT SIZE STANDARDS

Sector 31–33 Other sectors Total 

Number of industries or subindustries (‘‘exceptions’’) reviewed in this proposed rule ............... 360 72 432 

Total firms in industries reviewed in this proposed rule (2012 Economic Census) 1 .................. 266,774 70,750 337,524 

Total small firms in those industries under current size standards (2012 Economic Census) 1 258,290 68,679 326,969 

Small firms as % of total firms (2012 Economic Census) 1 ........................................................ 96.8% 97.1% 96.9% 

Total contract dollars ($ million) (FPDS–NG FY 2018–2020) ..................................................... $181,818 $49,198 $231,016 

Total small business contract dollars under current standards ($ million) (FPDS–NG FY2016– 

2018) ........................................................................................................................................ $28,713 $14,326 $43,039 

Small business dollars as % of total dollars (FPDS–NG FY 2018–2020) .................................. 15.8% 29.1% 18.6% 

Total number of unique firms getting Federal contracts (FPDS–NG FY 2018–2020) ................ 34,209 8,959 43,168 

Total number of unique small firms getting small business contracts (FPDS–NG FY 2018– 

2020) ........................................................................................................................................ 29,037 7,065 36,102 

Small firms getting Federal contracts as % of total firms getting Federal contracts (FPDS–NG 

FY 2018–2020) ........................................................................................................................ 84.9% 78.9% 83.6% 

Number of 7(a) and 504/CDC loans (FY 2018–2020) ................................................................ 4,484 513 4,997 

Amount of 7(a) and 504 loans ($ million) (FY 2018–2020) ........................................................ $2,863 $235 $3,098 

Number of EIDL loans (FY 2018–2020) 2 ................................................................................... 202 41 243 

Amount of EIDL loans ($million) (FY 2018–2020) 2 .................................................................... $8.3 $2.4 $10.7 

1These figures do not include two 6-digit NAICS industries and 5 subindustries or ‘‘exceptions’’ for which Economic Census data is not available. 2Excludes 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 432 employeebased size standards in Sectors 31–33 

and other sectors that are reviewed in 

this rule, 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 considerations for the impacts from 

the COVID–19 pandemic, SBA proposes 

to increase 150 size standards, including 

120 in Sector 31–33 and 30 in other 

sectors. Below are descriptions of the 

benefits, costs, and transfer impacts of 

these proposed increases to size 

standards. 

Benefits of Increases to Size Standards 

The most significant benefit to 

businesses from proposed increases to 

size standards is gaining eligibility for 

Federal small business assistance 

programs or retaining that eligibility for 

a longer period. 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 various 

business development and contracting 

programs. These include the 8(a)/ 

Business Development (BD) Program, 

the Small Disadvantaged Businesses 

(SDB) Program, the Historically 

Underutilized Business Zones 

(HUBZone) Program, the WomenOwned 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. 

Based on the 2012 Economic Census 

(latest available when this proposed rule 

was prepared), SBA estimates that in 

150 industries or subindustries 

(‘‘exceptions’’) in NAICS Sector 31–33 

and other sectors with employee-based 

size standards for which it has proposed 

to increase size standards, 248 firms (see 

Table 15), not small under the current 

size standards, will become small under 

the proposed size standards increases 

and therefore become eligible for these 

programs. That represents about 0.3% of 

all firms classified as small under the 

current size standards in industries for 

which SBA has proposed increasing size 

standards. If adopted, proposed size 

standards would result in an increase to 

the small business share of total receipts 

in those industries from 26.0% to 

26.5%. 

With more businesses qualifying as 

small under the proposed increases to 

size standards, Federal agencies will 

have a larger pool of small businesses 

from which to draw for their small 

business procurement programs. 


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24818 Federal Register / Vol. 87, No. 80 / Tuesday, April 26, 2022 / Proposed Rules 

Growing small businesses that are close 

to exceeding the current 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 

111 firms that are active in Federal 

contracting in those industries would 

gain small business status under the 

proposed size standards. Based on the 

same data, SBA estimates that those 

newly-qualified small businesses under 

the proposed increases to size 

standards, if adopted, could receive 

Federal small business contracts totaling 

$253 million annually. That represents 

a 2.4% increase to small business 

contract dollars from the baseline. Table 

15, Impacts of Proposed Increases to 

Size Standards, provides these results 

by NAICS sector. 

The added competition from more 

businesses qualifying as small can result 

in lower prices to the 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 proposed increases 

to size standards, HUBZone firms might 

receive more set-aside contracts and 

fewer full and open contracts, thereby 

resulting in some cost savings to 

agencies. SBA cannot estimate such cost 

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 setasides. 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. 

As shown in Table 15, under SBA’s 

7(a) and 504 loan programs, based on 

the data for fiscal years 2018–2020, SBA 

estimates up to about 9 SBA 7(a) and 

504 loans totaling about $5.6 million 

could be made to these newly-qualified 

small businesses in those industries 

under the proposed size standards. That 

represents a 0.7% increase to the loan 

amount compared to the baseline. 

TABLE 15—IMPACTS OF PROPOSED INCREASES TO SIZE STANDARDS

Sector 31–33 Other sectors Total 

Number of industries or subindustries (‘‘exceptions’’) with proposed increases to size standards .......................................................................................................................................... 120 30 150 

Total current small businesses in industries with proposed increases to size standards (2012 

Economic Census) 1 ................................................................................................................. 68,925 5,914 74,839 

Additional firms qualifying as small under proposed increases to size standards (2012 Economic Census) 1 ....................................................................................................................... 194 54 248 

% of additional firms qualifying as small relative to current small businesses in industries with 

proposed increases to size standards (2012 Economic Census) 1 ......................................... 0.3% 0.9% 0.3% 

Number of current unique small firms getting small business contracts in industries with proposed increases to size standards (FPDS–NG FY 2018–2020) 2 ........................................... 13,759 815 14,574 

Additional number of small business firms gaining small business status under proposed increases to size standards (FPDS–NG FY 2018–2020) .......................................................... 87 24 111 

% increase to number of small businesses relative to current unique small firms getting small 

business contracts in industries with proposed increases to size standards (FPDS–NG FY 

2018–2020) .............................................................................................................................. 0.6% 2.9% 0.8% 

Total small business contract dollars under current size standards in industries or subindustries with proposed increases to size standards ($ million) (FPDS–NG FY 2018–2020) ....... $9,465 $1,243 $10,708 

Estimated small business dollars available to newly-qualified small firms ($ million) (FPDS– 

NG FY 2018–2020) 3 ................................................................................................................ $73 $180 $253 

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

current standards in industries with proposed increases to size standards ........................... 0.8% 14.6% 2.4% 

Total number of 7(a) and 504 loans to small business in industries with proposed increases 

to size standards (FY 2018–2020) .......................................................................................... 1,144 62 1,206 

Total amount of 7(a) and 504 loans to small businesses in industries with proposed increases to size standards ($ million) (FY 2018–2020) ............................................................ $741 $350 $776 

Estimated number of 7(a) and 504 loans to newly-qualified small firms .................................... 5 4 9 

Estimated 7(a) and 504 loan amount to newly-qualified small firms ($ million) ......................... $3.2 $2.4 $5.6 

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

industries with proposed increases to size standards ............................................................. 0.4% 7.0% 0.7%

Total number of EIDL loans to small businesses in industries with proposed increases to size 

standards (FY 2018–2020) 4 .................................................................................................... 67 12 79 

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

standards ($ million) (FY 2018–2020) 4 ................................................................................... $2.9 $0.8 $3.7 

Estimated no. of EIDL loans to newly-qualified small firms 4 ...................................................... 3 4 7 

Estimated EIDL loan amount to newly-qualified small firms ($ million) 4 .................................... $0.1 $0.2 $0.3 

% increase to EIDL loan amount relative to the total amount of disaster loans in industries 

with proposed increases to size standards 4 ........................................................................... 4.5% 36.3% 9.1% 

1These figures do not include two 6-digit NAICS industries and 5 subindustries or ‘‘exceptions’’ for which Economic Census data is not available. 2Total impact represents total unique number of firms impacted to avoid double counting as some firms participate in more than one industry. 

3Additional dollars are calculated multiplying average small business dollars obligated per unique firm times change in number of firms. Numbers of firms are calculated using the SBA’s current size standards, not the contracting officer’s size designation. 4Excludes 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. 


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Newly-qualified small businesses will 

also benefit from the SBA’s EIDL 

program. Since the benefit provided 

through this program is contingent on 

the occurrence and severity of a disaster 

in the future, SBA cannot make a 

precise estimate of this impact. 

However, based on the disaster loan 

program data for fiscal years 2018–2020, 

SBA estimates that, on an annual basis, 

the newly-defined small businesses 

under the proposed increases to size 

standards, if adopted, could receive 

seven disaster loans, totaling about $0.3 

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. 

Costs of Increases to Size Standards 

Besides having to register in the 

System of Award Management (SAM) to 

be eligible 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 as a result of proposed 

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 

impacted businesses that are willing to 

participate in Federal contracting are 

already registered in SAM and update 

their SAM profiles annually. More 

importantly, this proposed rule does not 

establish the new size standards for the 

very first time; rather it intends to 

modify 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 proposed 

increases to size standards, if adopted, 

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 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 proposed 

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 of size 

protests processed shows that the 

number of size protests decreased 

following the increases to size standards 

as part of the first five-year 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 receiptsbased size standards was completed by 

the end of FY 2013), as compared to 

about 500 during fiscal years 2018–2020 

when size standard increases 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 income 

based 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 proposed 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 proposed size 

standards. However, the additional costs 

associated with fewer bidders are 

expected to be minor since, 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 

proposed increases to size standards, 

HUBZone firms might 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 Increases to Size 

Standards 

The proposed increases to 150 size 

standards, if adopted, 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 since total Federal 

contract dollars available for businesses 

to compete for will not change with 

changes to size standards. While 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 proposed increases to size 

standards, some unrestricted Federal 

contracts which 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 proposed 

increases to 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 proposed changes in 

the proposed rule. In this section, SBA 

describes and analyzes two such 

alternatives to the proposed rule. 

Alternative Option One, a more 

stringent alternative to the SBA’s 

proposal, would propose adopting size 

standards based solely on the analytical 

results. In other words, the size 

standards of 150 industries or 

subindustries (or ‘‘exceptions’’) for 

which the analytical results, as 


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24820 Federal Register / Vol. 87, No. 80 / Tuesday, April 26, 2022 / Proposed Rules 

presented in Table 4 (above), suggested 

raising size standards would be raised. 

However, the size standards of 216 

industries for which the analytical 

results suggest lowering size standards 

would be lowered. For the 66 remaining 

industries or subindustries for which 

the results suggested no changes, size 

standards would be maintained at their 

current levels. Alternative Option Two 

would propose retaining existing size 

standards for all industries, given the 

uncertainty generated by the ongoing 

COVID–19 pandemic. Below, SBA 

discusses benefits, costs and net impacts 

of each option. 

Alternative Option One: Adopting All 

Calculated Size Standards 

As discussed in the Alternatives 

Considered section of this proposed 

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 setaside 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 

review of size standards 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 propose the 

same general policy of not lowering size 

standards in the ongoing second fiveyear review of size standards review as 

well. 

The primary benefits of adopting 

Alternative Option One would include: 

(1) SBA’s procurement, management, 

technical and financial assistance 

resources would be targeted to their 

intended beneficiaries according to the 

analytical results; (2) Adopting the size 

standards based on the analytical results 

would also promote consistency and 

predictability of 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 seeks comment on the 

impact of adopting the size standard 

based on the analytical results. 

As explained in the ‘‘Size Standards 

Methodology’’ white paper, in addition 

to adopting all results of the analysis of 

the primary factors, SBA evaluates other 

relevant factors as needed such as the 

impact of the reductions or increases of 

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 have already discussed the 

benefits, costs and transfer impacts of 

increasing 150 and retaining 282 size 

standards. Below we discuss the 

benefits, costs, and transfer impacts of 

decreasing 216 size standards based on 

the analytical results. 

Benefits of Decreases to Size Standards 

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 loan programs, disaster 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 smaller size standards when 

the results support them diminishes the 

risk of awarding contracts to firms 

which are not small anymore. 

Decreasing size standards may reduce 

the administrative costs of the 

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 reduce the risks of providing SBA’s 

loans to firms that are not needing them 

the most or of allowing firms that are 

not eligible for small business set-asides 

to participate on the SBA procurement 

programs, which might provide a better 

chance for smaller firms to grow and 

benefit from the opportunities available 

on the Federal market, and strengthen 

the small business industrial base for 

the Federal Government. In this 

proposed rule, SBA is proposing to 

decrease the size standard for NAICS 

221118 in order to exclude dominant 

firms from obtaining small business 

status in this industry. As explained in 

more detail in the Evaluation of 

Dominance in Field of Operation 

sections, based on the evaluation of the 

latest available industry data, SBA does 

not anticipate that decreasing the size 

standard for this industry will impact 

any currently small firms. 

Costs of Decreases to Size Standards 

Table 16, Impacts of Decreases to Size 

Standards Under Alternative Option 

One, shows the various impacts of 

lowering size standards in 216 

industries based solely on the analytical 

results. Based on the 2012 Economic 

Census, about 620 (0.3%) firms would 

lose their small business status under 

Alternative Option One. Similarly, 

based on the FPDS–NG data for fiscal 

years 2018–2020, 167 (0.7%) small 

businesses participating in Federal 

contracting would lose their small status 

and become ineligible to compete for 

set-aside 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, in Alternative 

Option One, during fiscal years 2018– 

2020, agencies awarded, on an annual 

basis, about $28.0 billion in small 

business contracts in those 216 

industries for which this option 

considered decreasing size standards. 

Table 16 shows that lowering size 

standards in 216 industries would 

reduce Federal contract dollars awarded 

to small businesses by $247 million or 

about 0.9% relative to the baseline level. 

Because of the importance of these 

industries for the Federal procurement, 

SBA may adopt mitigating measures to 

reduce the negative impact. SBA could 

take 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; or (3). Retain the size 

standards at their current levels. 

TABLE 16—IMPACTS OF DECREASES TO SIZE STANDARDS UNDER ALTERNATIVE OPTION ONE

Sector 31–33 Other sectors Total 

Number of industries for which SBA considered decreasing size standards ............................. 187 29 216 

Total current small businesses in industries for which SBA considered decreasing size standards (2012 Economic Census) ................................................................................................ 164,271 55,876 220,147 


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TABLE 16—IMPACTS OF DECREASES TO SIZE STANDARDS UNDER ALTERNATIVE OPTION ONE—Continued 

Sector 31–33 Other sectors Total 

Estimated number of firms losing small status in industries for which SBA considered decreasing size standards (2012 Economic Census) ................................................................. 512 108 620 

% of firms losing small status relative to current small businesses in industries for which SBA 

considered decreasing size standards (2012 Economic Census) .......................................... 0.31% 0.2% 0.3% 

Number of current unique small firms getting small business contracts in industries for which 

SBA considered decreasing size standards (FPDS–NG FY 2018–2020) 1 ............................ 19,342 6,020 24,632 

Estimated number of small business firms that would have lost small business status in industries for which SBA considered decreasing size standards (FPDS–NG FY 2018–2020) 1 130 50 167 

% 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) 1 ................................................................................................................ 0.7% 0.8% 0.7% 

Total small business contract dollars under current size standards in industries for which 

SBA considered decreasing size standards ($ million) (FPDS–NG FY 2018–2020) ............. $15,261 12,990 $28,251 

Estimated small business dollars not available to firms losing small business status in industries for which SBA considered decreasing size standards ($ million) (FPDS–NG FY 2018– 

2020) 2 ...................................................................................................................................... $127 $120 $247 

% 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 ... 0.8% 0.9% 0.9% 

Total number of 7(a) and 504 loans to small businesses in industries for which SBA considered decreasing size standards (FY 2018–2020) ................................................................... 2,886 389 3,275

Total amount of 7(a) and 504 loans to small businesses in industries for which SBA considered decreasing size standards ($ million) (FY 2018–2020) .................................................. $1,817 $171 $1,988 

Estimated number of 7(a) and 504 loans not available to firms that would have lost small 

business status in industries for which SBA considered decreasing size standards ............. 10 7 17 

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

($ million) .................................................................................................................................. $6.5 $3.2 $9.7 

% 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 ........................................ 0.4% 1.9% 0.5% 

Total number of EIDL loans to small businesses in industries for which SBA considered decreasing size standards (FY 2018–2020) 3 .............................................................................. 113 28 141 

Total amount of EIDL loans to small businesses in industries for which SBA considered decreasing size standards ($ million) (FY 2018–2020) 3 ............................................................. $3.9 $1.6 $5.5 

Estimated number of EIDL loans not available to firms that would have lost small business 

status in industries for which SBA considered decreasing size standards 3 ........................... 3 6 9 

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

($ million) 3 ............................................................................................................................... $0.1 $0.4 $0.5 

% decrease to EIDL loan amount relative to the baseline 3 ....................................................... 2.7% 23.8% 8.7% 

1Total impact represents total unique number of firms impacted to avoid double counting as some firms participate in more than one industry. 

2Additional dollars are calculated multiplying average small business dollars obligated per unique small firm times change in number of firms. 

Numbers of firms are calculated using the SBA’s current size standards, 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. 

Nevertheless, since Federal agencies 

are still required to meet the statutory 

small business contracting goal of 23%, 

actual impacts on the overall set-aside 

activity is 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 so that they 

could meet their small business 

contracting goals. 

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 16, 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 current 

or calculated size standards. For 

example, based on the loan data for 

fiscal years 2018–2020, SBA estimates 

that about 17 of SBA’s 7(a) and 504 

loans with total amounts of $9.7 million 

could not be made to those small 

businesses that would lose eligibility 

under the calculated size standards. 

That represents about 0.5% decrease to 

the loan amount compared to the 

baseline. However, the actual impact on 

businesses seeking SBA’s loans could be 

much less as businesses losing small 

business eligibility under the decreases 

to industry-based size standards could 

still qualify for SBA’s 7(a) and CDC/504 

loans under the tangible net worth and 

net income-based alternative size 

standard. 

Businesses losing small business 

status would also be impacted in terms 

of access to loans through the SBA’s 

EIDL 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. Additionally, all 

those businesses were below the 

calculated size standards. Since this 

program is contingent on the occurrence 

and severity of a disaster in the future, 

SBA cannot make a precise estimate of 

this impact. However, based on the 

disaster loan data for fiscal years 2018– 

2020, SBA estimates that, under 

Alternative Option One, about nine 

SBA’s disaster loans totaling $0.5 

million could not be made to those 

small businesses that would lose 


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24822 Federal Register / Vol. 87, No. 80 / Tuesday, April 26, 2022 / Proposed Rules 

eligibility under the calculated size 

standards (see Table 16). 

Small businesses becoming other than 

small if size standards were decreased 

might lose benefits through reduced 

fees, less paperwork, and fewer 

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 Decreases to Size 

Standards 

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 proposed 

increases to size standards, it would 

have no impact on the overall economic 

activity since the total Federal contract 

dollars available for businesses to 

compete for will stay the same. While 

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 under the 

reduced size standards are likely to 

obtain more set-aside 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 proposed increases to 

size standards (see Table 15). However, 

under Alternative Option One, SBA 

used the calculated size standards 

instead of the proposed increases to 

determine the impacts of changes to 

current thresholds. The impact of the 

increases of size standards were shown 

in Table 15 (above). Table 16 (above) 

and Table 17, Net Impacts of Size 

Standards Changes under Alternative 

Option One, below, present the impact 

of the decreases of size standards and 

the net impact of adopting the 

calculated results under alternative 

option one, respectively. Net impacts 

are obtained by subtracting impacts of 

decreases to size standards in Table 16 

from impacts of increases to size 

standards in Table 15. 

Based on the 2012 Economic Census 

(the latest available when this proposed 

rule was developed), SBA estimates that 

in 366 industries and subindustries 

(‘‘exceptions’’) reviewed in this 

proposed rule for which the analytical 

results suggested to change size 

standards, about 372 firms (see Table 

17), would become other than small 

under Alternative Option One. That 

represents about 0.1% of all firms 

classified as small under the current 

size standards. 

Based on the FPDS–NG data for fiscal 

years 2018–2020, SBA estimates that 

about 58 unique active firms in Federal 

contracting in those industries would 

lose their small business status under 

alternative option one, most of them 

from Sector 31–33. This represents a 

decrease of about 0.1% 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 $6.0 million of Federal 

procurement dollars would become 

available to all small firms, including 

those gaining small status. This 

represents an increase of 0.02% from 

the baseline. SBA estimates that the 

dollars obligated to small businesses 

will increase despite a reduction in the 

total number of small firms because the 

contract dollars to newly qualified small 

businesses in sectors other than 

manufacturing with increases to size 

standards is higher than the contract 

dollars to small businesses losing small 

business status in sectors other than 

manufacturing with decreases to size 

standards. 

Based on the SBA’s loan data for 

fiscal years 2018–2020, the total number 

of 7(a) and 504 loans may decrease by 

about eight loans, and the loan amount 

by about $4.1 million. This represents a 

0.1% decrease of the loan amount 

relative to the baseline. 

Firms’ participation under the SBA’s 

EIDL program will be affected as well. 

Since 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 

disaster loan program data for fiscal 

years 2018–2020, SBA estimates that the 

total number of EIDL loans may 

decrease by about two loans, and the 

loan amount by about $0.1 million. This 

represents a 1.3% decrease of the loan 

amount relative to the baseline. 

TABLE 17—NET IMPACTS OF SIZE STANDARDS CHANGES UNDER ALTERNATIVE OPTION ONE

Sector 31–33 Other sectors Total 

Number of industries or subindustries (‘‘exceptions’’) with changes to size standards .............. 307 59 366 

Total number of small firms under the current size standards in industries with changes to 

size standards (2012 Economic Census) 1 .............................................................................. 233,196 61,790 294,986 

Additional number of firms qualifying as small under size standards changes (2012 Economic 

Census) 1 .................................................................................................................................. ¥318 ¥54 ¥372 

% of additional firms qualifying as small relative to total current small firms (2012 Economic 

Census) 1 .................................................................................................................................. ¥0.1% ¥0.1% ¥0.1% 

Number of current unique small firms getting small business contracts in industries with 

changes to size standards (FPDS–NG FY 2018–2020) ......................................................... 33,101 6,835 39,206 

Additional number of unique small firms gaining small business status in industries with 

changes to size standards (FPDS–NG FY 2018–2020) 2 ....................................................... ¥43 ¥26 ¥56 

% increase to small firms relative to current unique small firms gaining small business status 

(FPDS–NG FY 2018–2020) ..................................................................................................... ¥0.1% ¥0.4% ¥0.1% 


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TABLE 17—NET IMPACTS OF SIZE STANDARDS CHANGES UNDER ALTERNATIVE OPTION ONE—Continued 

Sector 31–33 Other sectors Total 

Total small business contract dollars under current size standards in industries with changes 

to size standards ($ million) (FPDS–NG FY 2018–2020) ....................................................... $24,726 $14,233 $38,959 

Estimated small business dollars available to newly-qualified small firms ($ million) FPDS– 

NG FY 2018–2020) .................................................................................................................. ¥$54.0 $61.0 $7.0 

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

standards .................................................................................................................................. ¥0.2% 0.4% 0.02% 

Total number of 7(a) and 504 loans to small businesses (FY 2018–2020) ............................... 4,484 513 4,997 

Total amount of 7(a) and 504 loans to small businesses (FY 2018–2020) ............................... $2,863 $235 $3,098 

Estimated number of additional 7(a) and 504 loans available to newly-qualified small firms .... ¥5.0 ¥3.0 ¥8.0 

Estimated additional 7(a) and 504 loan amount to newly-qualified small firms ($ million) ......... ¥$3.3 ¥$0.8 ¥$4.1 

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

small businesses ...................................................................................................................... ¥0.1% ¥0.3% ¥0.1% 

Total number of EIDL loans to small businesses (FY 2018–2020) 4 .......................................... 202 41 243 

Total amount of EIDL loans to small businesses (FY 2018–2020) 4 .......................................... $8.3 $2.4 $10.7 

Estimated number of additional EIDL loans to newly qualified small firms 4 .............................. 0 ¥2 ¥2 

Estimated additional EIDL loan amount to newly qualified small firms ($ million) 4 ................... $0.02 ¥$0.2 ¥$0.1 

% increase to EIDL loan amount relative to the total amount of disaster loans to small businesses 4 .................................................................................................................................... 0.3% ¥6.8% ¥1.3% 

1These figures do not include two 6-digit NAICS industries and 5 subindustries or ‘‘exceptions’’ for which Economic Census data is not available. 2Total impact represents total unique number of firms impacted to avoid double counting as some firms participate in more than one industry. 

3Additional dollars are calculated multiplying average small business dollars obligated per unique firm times change in number of firms. Numbers of firms are calculated using the SBA’s current size standards, not the contracting officer’s size designation. 4Excludes 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. 

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 150 and retaining 282 size 

standards under this proposed 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 firms from small business 

benefits. 

Congressional Review Act, 5 U.S.C. 801– 

808 

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. 

The OMB’s Office of Information and 

Regulatory Affairs has determined that 

this is not a major rule under 5 U.S.C. 

804(2). 

Initial 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 proposed rule, if adopted, may 

have a significant impact on a 

substantial number of small businesses 

in the industries covered by this 

proposed rule. As described above, this 

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 an 

initial regulatory flexibility analysis 

(IRFA) of this proposed 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? and 

(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 

industries covered by this proposed 

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 proposed 

standards revisions in this proposed 

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. 


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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 (the latest available 

when this proposed rule was prepared), 

SBA estimates that there are nearly 

295,000 small firms in industries 

covered by this rulemaking for which 

SBA is proposing to change size 

standards. If the proposed rule is 

adopted in its present form, SBA 

estimates that nearly 250 additional 

businesses will become small. 

3. What are the projected reporting, 

record keeping and other compliance 

requirements of the rule? 

The proposed size standard changes 

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 

(Federal Acquisition Regulation (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. There 

are no costs associated with SAM 

registration or annual re-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, 

which 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 establish 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 its proposal to increase 

150 size standards and maintain 282 

size standards at their current levels. 

The first alternative SBA considered 

was adopting size standards based 

solely on the analytical results, 

including the results from the 

evaluation of dominance and field of 

operation. In other words, the size 

standards of 150 industries for which 

the analytical results suggest raising size 

standards would be raised. However, 

the size standards of 216 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 

Sector 31–33 (see Table 16). 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 

150 size standards and decreasing 216. 

SBA believes retaining all size standards 

at their current levels would be more 

onerous for small businesses than the 

option of increasing 150 and retaining 

282 size standards. Postponing the 

adoption of the higher calculated size 

standards would be detrimental for 

otherwise small businesses 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 proposed rule 

is consistent with section 6 of Executive 

Order 13563 and the 2010 Jobs Act 

which requires SBA to review every five 

years 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. In accordance with the Jobs 

Act, SBA completed the review of all 

small business size standards (except 

those for agricultural enterprises 

previously set by Congress), making 

appropriate adjustments to size 

standards for a number of industries to 

reflect current Federal and industry 

market conditions. 

SBA issued a revised white paper 

entitled ‘‘Size Standards Methodology’’ 

and published a notification in the April 

27, 2018, edition of the Federal Register 

(83 FR 18468) 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 before finalizing 

and adopting the revised Methodology. 

For a summary of comments received 

and SBA’s responses, see the 

notification published in the Federal 

Register on April 11, 2019 (84 FR 

14587). 

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. 


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Federal Register / Vol. 87, No. 80 / Tuesday, April 26, 2022 / Proposed Rules 24825 

Executive Order 13132 

For purposes of Executive Order 

13132, SBA has determined that this 

proposed rule will not have substantial, 

direct effects on the States, on the 

relationship between the National 

Government and the States, or on the 

distribution of power and 

responsibilities among the various 

levels of government. Therefore, SBA 

has determined that this proposed 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 rule will not 

impose any new reporting or 

recordkeeping 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 proposes to amend 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); Public Law 116– 

136, Section 1114. 

■ 2. In § 121.201, amend the table 

‘‘Small Business Size Standards by 

NAICS Industry’’ by: 

■ a. Revising entries ‘‘212210,’’ 

‘‘212230,’’ ‘‘212299,’’ ‘‘212313,’’ 

‘‘212319,’’ ‘‘212322,’’ ‘‘212325,’’ 

‘‘212391,’’ ‘‘212393,’’ ‘‘212399,’’ entries 

‘‘221111’’ through ‘‘221115,’’ ‘‘221117,’’ 

‘‘221118,’’ ‘‘221121,’’ ‘‘221122,’’ 

‘‘221210,’’ ‘‘311111,’’ ‘‘311119,’’ 

‘‘311211,’’ ‘‘311212,’’ ‘‘311221,’’ 

‘‘311224,’’ ‘‘311225,’’ ‘‘311230,’’ 

‘‘311313,’’ ‘‘311314,’’ ‘‘311411,’’ 

‘‘311422,’’ ‘‘311511,’’ ‘‘311514,’’ 

‘‘311611,’’ ‘‘311824,’’ ‘‘311920,’’ 

‘‘311930,’’ ‘‘311941,’’ ‘‘311942,’’ 

‘‘311991,’’ ‘‘311999,’’ ‘‘312111,’’ 

‘‘312112,’’ ‘‘312140,’’ ‘‘313220,’’ 

‘‘313230,’’ ‘‘314999,’’ ‘‘315190,’’ 

‘‘315990,’’ ‘‘316110,’’ ‘‘321113,’’ 

‘‘321114,’’ ‘‘321211,’’ ‘‘322110,’’ 

‘‘322122,’’ ‘‘323111,’’ ‘‘323120,’’ 

‘‘324122,’’ ‘‘324191,’’ ‘‘324199,’’ 

‘‘325110,’’ ‘‘325120,’’ ‘‘325130,’’ 

‘‘325220,’’ ‘‘325311,’’ ‘‘325312,’’ 

‘‘325314,’’ ‘‘325320,’’ ‘‘325412,’’ 

‘‘325520,’’ entries ‘‘325611’’ through 

‘‘325613,’’ ‘‘325910,’’ ‘‘325991,’’ 

‘‘325998,’’ ‘‘326121,’’ ‘‘326130,’’ 

‘‘326220,’’ ‘‘326299,’’ ‘‘327211,’’ 

‘‘327410,’’ ‘‘327910,’’ ‘‘327992,’’ 

‘‘327999,’’ ‘‘331313,’’ ‘‘331315,’’ 

‘‘331420,’’ ‘‘331491,’’ ‘‘331492,’’ 

‘‘331512,’’ ‘‘331513,’’ ‘‘331523,’’ 

‘‘331524,’’ ‘‘332112,’’ ‘‘332114,’’ 

‘‘332117,’’ ‘‘332215,’’ ‘‘332439,’’ 

‘‘332613,’’ ‘‘332722,’’ ‘‘332812,’’ 

‘‘332992,’’ ‘‘332996,’’ ‘‘333131,’’ 

‘‘333243,’’ ‘‘333314,’’ ‘‘333924,’’ 

‘‘333991,’’ ‘‘333993,’’ ‘‘333995,’’ 

‘‘333997,’’ ‘‘334290,’’ ‘‘334416,’’ 

‘‘334511,’’ ‘‘334512,’’ ‘‘334514,’’ 

‘‘334517,’’ ‘‘334519,’’ ‘‘335122,’’ 

‘‘335129,’’ ‘‘335311,’’ ‘‘335912,’’ 

‘‘335931,’’ ‘‘335991,’’ ‘‘335999,’’ 

‘‘336310,’’ ‘‘336414,’’ ‘‘336419,’’ 

‘‘336611,’’ ‘‘336991,’’ ‘‘337125,’’ 

‘‘337214,’’ ‘‘339113,’’ ‘‘339910,’’ 

‘‘339930,’’ ‘‘339991,’’ ‘‘339994,’’ 

‘‘339999,’’ ‘‘483111,’’ ‘‘483113,’’ 

‘‘483114,’’ ‘‘483211,’’ ‘‘483212,’’ 

‘‘511199,’’ ‘‘512230,’’ and ‘‘512250;’’ 

■ b. Removing the entry ‘‘541715’’ and 

the three ‘‘Except’’ entries following 

‘‘541715;’’ 

■ c. Adding entries ‘‘541715,’’ ‘‘541715 

(Exception 1)’’, ‘‘541715 (Exception 2)’’, 

and ‘‘541715 (Exception 3)’’ in 

numerical order; and 

■ d. Revising the entry ‘‘562910 

(Exception)’’. 

The revisions and additions 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 code NAICS U.S. industry title Size standards in 

millions of dollars 

Size standards 

in number of 

employees 

*******

Sector 21—Mining, Quarrying, and Oil and Gas Extraction 

*******

Subsector 212—Mining (except Oil and Gas) 

*******

212210 ........................... Iron Ore Mining ................................................................................................ .............................. 1,400 

* * * * * * * 

212230 ........................... Copper, Nickel, Lead, and Zinc Mining ........................................................... .............................. 1,400 

* * * * * * * 

212299 ........................... All Other Metal Ore Mining .............................................................................. .............................. 1,250 

* * * * * * * 

212313 ........................... Crushed and Broken Granite Mining and Quarrying ...................................... .............................. 850 

212319 ........................... Other Crushed and Broken Stone Mining and Quarrying ............................... .............................. 550 

* * * * * * * 

212322 ........................... Industrial Sand Mining ..................................................................................... .............................. 750 


jspears on DSK121TN23PROD with PROPOSALS2
24826 Federal Register / Vol. 87, No. 80 / Tuesday, April 26, 2022 / Proposed Rules 

SMALL BUSINESS SIZE STANDARDS BY NAICS INDUSTRY—Continued 

NAICS code NAICS U.S. industry title Size standards in 

millions of dollars 

Size standards 

in number of 

employees 

*******

212325 ........................... Clay and Ceramic and Refractory Minerals Mining ........................................ .............................. 650 

212391 ........................... Potash, Soda, and Borate Mineral Mining ...................................................... .............................. 1,050 

* * * * * * * 

212393 ........................... Other Chemical and Fertilizer Mineral Mining ................................................. .............................. 600 

212399 ........................... All Other Nonmetallic Mineral Mining .............................................................. .............................. 600 

* * * * * * * 

Sector 22—Utilities 

Subsector 221—Utilities 

221111 ........................... Hydroelectric Power Generation ..................................................................... .............................. 750 

221112 ........................... Fossil Fuel Electric Power Generation ............................................................ .............................. 950 

221113 ........................... Nuclear Electric Power Generation ................................................................. .............................. 1,150 

221114 ........................... Solar Electric Power Generation ..................................................................... .............................. 500 

221115 ........................... Wind Electric Power Generation ..................................................................... .............................. 1,150 

* * * * * * * 

221117 ........................... Biomass Electric Power Generation ................................................................ .............................. 550 

221118 ........................... Other Electric Power Generation .................................................................... .............................. 650 

221121 ........................... Electric Bulk Power Transmission and Control ............................................... .............................. 950 

221122 ........................... Electric Power Distribution .............................................................................. .............................. 1,100 

221210 ........................... Natural Gas Distribution .................................................................................. .............................. 1,150 

* * * * * * * 

Sector 31–33—Manufacturing 

Subsector 311—Food Manufacturing 

311111 ........................... Dog and Cat Food Manufacturing ................................................................... .............................. 1,250 

311119 ........................... Other Animal Food Manufacturing .................................................................. .............................. 650 

311211 ........................... Flour Milling ..................................................................................................... .............................. 1,050 

311212 ........................... Rice Milling ...................................................................................................... .............................. 750 

* * * * * * * 

311221 ........................... Wet Corn Milling .............................................................................................. .............................. 1,300 

311224 ........................... Soybean and Other Oilseed Processing ......................................................... .............................. 1,250 

311225 ........................... Fats and Oils Refining and Blending .............................................................. .............................. 1,100 

311230 ........................... Breakfast Cereal Manufacturing ...................................................................... .............................. 1,300 

311313 ........................... Beet Sugar Manufacturing .............................................................................. .............................. 1,150 

311314 ........................... Cane Sugar Manufacturing ............................................................................. .............................. 1,050 

* * * * * * * 

311411 ........................... Frozen Fruit, Juice, and Vegetable Manufacturing ......................................... .............................. 1,100 

* * * * * * * 

311422 ........................... Specialty Canning ........................................................................................... .............................. 1,400 

* * * * * * * 

311511 ........................... Fluid Milk Manufacturing ................................................................................. .............................. 1,150 

* * * * * * * 

311514 ........................... Dry, Condensed, and Evaporated Dairy Product Manufacturing .................... .............................. 1,000 

* * * * * * * 

311611 ........................... Animal (except Poultry) Slaughtering .............................................................. .............................. 1,150 

* * * * * * * 

311824 ........................... Dry Pasta, Dough, and Flour Mixes Manufacturing from Purchased Flour .... .............................. 850 

* * * * * * * 

311920 ........................... Coffee and Tea Manufacturing ....................................................................... .............................. 1,000 

311930 ........................... Flavoring Syrup and Concentrate Manufacturing ........................................... .............................. 1,100 

311941 ........................... Mayonnaise, Dressing, and Other Prepared Sauce Manufacturing ............... .............................. 850 

311942 ........................... Spice and Extract Manufacturing .................................................................... .............................. 650 

311991 ........................... Perishable Prepared Food Manufacturing ...................................................... .............................. 700 

311999 ........................... All Other Miscellaneous Food Manufacturing ................................................. .............................. 700 


jspears on DSK121TN23PROD with PROPOSALS2
Federal Register / Vol. 87, No. 80 / Tuesday, April 26, 2022 / Proposed Rules 24827 

SMALL BUSINESS SIZE STANDARDS BY NAICS INDUSTRY—Continued 

NAICS code NAICS U.S. industry title Size standards in 

millions of dollars 

Size standards 

in number of 

employees 

Subsector 312—Beverage and Tobacco Product Manufacturing 

312111 ........................... Soft Drink Manufacturing ................................................................................. .............................. 1,400 

312112 ........................... Bottled Water Manufacturing ........................................................................... .............................. 1,100 

* * * * * * * 

312140 ........................... Distilleries ........................................................................................................ .............................. 1,100 

*******

Subsector 313—Textile Mills 

*******

313220 ........................... Narrow Fabric Mills and Schiffli Machine Embroidery .................................... .............................. 550 

313230 ........................... Nonwoven Fabric Mills .................................................................................... .............................. 850 

Subsector 314—Textile Product Mills 

*******

314999 ........................... All Other Miscellaneous Textile Product Mills ................................................. .............................. 550 

Subsector 315—Apparel Manufacturing 

*******

315190 ........................... Other Apparel Knitting Mills ............................................................................. .............................. 850 

* * * * * * * 

315990 ........................... Apparel Accessories and Other Apparel Manufacturing ................................. .............................. 600 

Subsector 316—Leather and Allied Product Manufacturing 

316110 ........................... Leather and Hide Tanning and Finishing ........................................................ .............................. 800 

* * * * * * * 

Subsector 321—Wood Product Manufacturing 

321113 ........................... Sawmills .......................................................................................................... .............................. 550 

321114 ........................... Wood Preservation .......................................................................................... .............................. 550 

321211 ........................... Hardwood Veneer and Plywood Manufacturing .............................................. .............................. 600 

*******

Subsector 322—Paper Manufacturing 

322110 ........................... Pulp Mills ......................................................................................................... .............................. 1,050 

* * * * * * * 

322122 ........................... Newsprint Mills ................................................................................................ .............................. 1,050 

* * * * * * * 

Subsector 323—Printing and Related Support Activities 

323111 ........................... Commercial Printing (except Screen and Books) ........................................... .............................. 650 

* * * * * * * 

323120 ........................... Support Activities for Printing .......................................................................... .............................. 550 

Subsector 324—Petroleum and Coal Products Manufacturing 

*******

324122 ........................... Asphalt Shingle and Coating Materials Manufacturing ................................... .............................. 1,100 

324191 ........................... Petroleum Lubricating Oil and Grease Manufacturing .................................... .............................. 900 

324199 ........................... All Other Petroleum and Coal Products Manufacturing .................................. .............................. 950 


jspears on DSK121TN23PROD with PROPOSALS2
24828 Federal Register / Vol. 87, No. 80 / Tuesday, April 26, 2022 / Proposed Rules 

SMALL BUSINESS SIZE STANDARDS BY NAICS INDUSTRY—Continued 

NAICS code NAICS U.S. industry title Size standards in 

millions of dollars 

Size standards 

in number of 

employees 

Subsector 325—Chemical Manufacturing 

325110 ........................... Petrochemical Manufacturing .......................................................................... .............................. 1,300 

325120 ........................... Industrial Gas Manufacturing .......................................................................... .............................. 1,200 

325130 ........................... Synthetic Dye and Pigment Manufacturing ..................................................... .............................. 1,050 

* * * * * * * 

325220 ........................... Artificial and Synthetic Fibers and Filaments Manufacturing .......................... .............................. 1,050 

325311 ........................... Nitrogenous Fertilizer Manufacturing .............................................................. .............................. 1,050 

325312 ........................... Phosphatic Fertilizer Manufacturing ................................................................ .............................. 1,350 

325314 ........................... Fertilizer (Mixing Only) Manufacturing ............................................................ .............................. 550 

325320 ........................... Pesticide and Other Agricultural Chemical Manufacturing ............................. .............................. 1,150 

* * * * * * * 

325412 ........................... Pharmaceutical Preparation Manufacturing .................................................... .............................. 1,300 

* * * * * * * 

325520 ........................... Adhesive Manufacturing .................................................................................. .............................. 550 

325611 ........................... Soap and Other Detergent Manufacturing ...................................................... .............................. 1,100 

325612 ........................... Polish and Other Sanitation Good Manufacturing .......................................... .............................. 900 

325613 ........................... Surface Active Agent Manufacturing ............................................................... .............................. 1,100 

* * * * * * * 

325910 ........................... Printing Ink Manufacturing ............................................................................... .............................. 750 

* * * * * * * 

325991 ........................... Custom Compounding of Purchased Resins .................................................. .............................. 600 

* * * * * * * 

325998 ........................... All Other Miscellaneous Chemical Product and Preparation Manufacturing .. .............................. 650 

Subsector 326—Plastics and Rubber Products Manufacturing 

*******

326121 ........................... Unlaminated Plastics Profile Shape Manufacturing ........................................ .............................. 600 

* * * * * * * 

326130 ........................... Laminated Plastics Plate, Sheet (except Packaging), and Shape Manufacturing............................... 650 

* * * * * * * 

326220 ........................... Rubber and Plastics Hoses and Belting Manufacturing ................................. .............................. 800 

* * * * * * * 

326299 ........................... All Other Rubber Product Manufacturing ........................................................ .............................. 650 

Subsector 327—Nonmetallic Mineral Product Manufacturing 

*******

327211 ........................... Flat Glass Manufacturing ................................................................................ .............................. 1,100 

* * * * * * * 

327410 ........................... Lime Manufacturing ......................................................................................... .............................. 1,050 

* * * * * * * 

327910 ........................... Abrasive Product Manufacturing ..................................................................... .............................. 900 

* * * * * * * 

327992 ........................... Ground or Treated Mineral and Earth Manufacturing ..................................... .............................. 600 

* * * * * * * 

327999 ........................... All Other Miscellaneous Nonmetallic Mineral Product Manufacturing ............ .............................. 750 

Subsector 331—Primary Metal Manufacturing 

*******

331313 ........................... Alumina Refining and Primary Aluminum Production ..................................... .............................. 1,300 


jspears on DSK121TN23PROD with PROPOSALS2
Federal Register / Vol. 87, No. 80 / Tuesday, April 26, 2022 / Proposed Rules 24829 

SMALL BUSINESS SIZE STANDARDS BY NAICS INDUSTRY—Continued 

NAICS code NAICS U.S. industry title Size standards in 

millions of dollars 

Size standards 

in number of 

employees 

*******

331315 ........................... Aluminum Sheet, Plate, and Foil Manufacturing ............................................. .............................. 1,400 

* * * * * * * 

331420 ........................... Copper Rolling, Drawing, Extruding, and Alloying .......................................... .............................. 1,050 

331491 ........................... Nonferrous Metal (except Copper and Aluminum) Rolling, Drawing, and Extruding............................... 900 

331492 ........................... Secondary Smelting, Refining, and Alloying of Nonferrous Metal (except 

Copper and Aluminum).

.............................. 850 

* * * * * * * 

331512 ........................... Steel Investment Foundries ............................................................................ .............................. 1,050 

331513 ........................... Steel Foundries (except Investment) .............................................................. .............................. 700 

331523 ........................... Nonferrous Metal Die-Casting Foundries ........................................................ .............................. 700 

331524 ........................... Aluminum Foundries (except Die-Casting) ..................................................... .............................. 550 

* * * * * * * 

Subsector 332—Fabricated Metal Product Manufacturing 

*******

332112 ........................... Nonferrous Forging ......................................................................................... .............................. 950 

332114 ........................... Custom Roll Forming ....................................................................................... .............................. 600 

332117 ........................... Powder Metallurgy Part Manufacturing ........................................................... .............................. 550 

* * * * * * * 

332215 ........................... Metal Kitchen Cookware, Utensil, Cutlery, and Flatware (except Precious) 

Manufacturing.

.............................. 1,000 

* * * * * * * 

332439 ........................... Other Metal Container Manufacturing ............................................................. .............................. 600 

* * * * * * * 

332613 ........................... Spring Manufacturing ...................................................................................... .............................. 600 

* * * * * * * 

332722 ........................... Bolt, Nut, Screw, Rivet, and Washer Manufacturing ...................................... .............................. 600 

* * * * * * * 

332812 ........................... Metal Coating, Engraving (except Jewelry and Silverware), and Allied Services to Manufacturers............................... 600 

* * * * * * * 

332992 ........................... Small Arms Ammunition Manufacturing .......................................................... .............................. 1,300 

* * * * * * * 

332996 ........................... Fabricated Pipe and Pipe Fitting Manufacturing ............................................. .............................. 550 

* * * * * * * 

Subsector 333—Machinery Manufacturing 6

*******

333131 ........................... Mining Machinery and Equipment Manufacturing ........................................... .............................. 900 

* * * * * * * 

333243 ........................... Sawmill, Woodworking, and Paper Machinery Manufacturing ........................ .............................. 550 

* * * * * * * 

333314 ........................... Optical Instrument and Lens Manufacturing ................................................... .............................. 600 

* * * * * * * 

333924 ........................... Industrial Truck, Tractor, Trailer, and Stacker Machinery Manufacturing ....... .............................. 900 

333991 ........................... Power-Driven Hand Tool Manufacturing ......................................................... .............................. 950 

* * * * * * * 

333993 ........................... Packaging Machinery Manufacturing .............................................................. .............................. 600 


jspears on DSK121TN23PROD with PROPOSALS2
24830 Federal Register / Vol. 87, No. 80 / Tuesday, April 26, 2022 / Proposed Rules 

SMALL BUSINESS SIZE STANDARDS BY NAICS INDUSTRY—Continued 

NAICS code NAICS U.S. industry title Size standards in 

millions of dollars 

Size standards 

in number of 

employees 

*******

333995 ........................... Fluid Power Cylinder and Actuator Manufacturing ......................................... .............................. 800 

* * * * * * * 

333997 ........................... Scale and Balance Manufacturing .................................................................. .............................. 700 

* * * * * * * 

Subsector 334—Computer and Electronic Product Manufacturing 6

*******

334290 ........................... Other Communications Equipment Manufacturing ......................................... .............................. 800 

* * * * * * * 

334416 ........................... Capacitor, Resistor, Coil, Transformer, and Other Inductor Manufacturing ... .............................. 550 

* * * * * * * 

334511 ........................... Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing............................... 1,350 

334512 ........................... Automatic Environmental Control Manufacturing for Residential, Commercial, and Appliance Use............................... 650 

* * * * * * * 

334514 ........................... Totalizing Fluid Meter and Counting Device Manufacturing ........................... .............................. 850 

* * * * * * * 

334517 ........................... Irradiation Apparatus Manufacturing ............................................................... .............................. 1,200 

334519 ........................... Other Measuring and Controlling Device Manufacturing ................................ .............................. 600 

* * * * * * * 

Subsector 335—Electrical Equipment, Appliance and Component Manufacturing 6

*******

335122 ........................... Commercial, Industrial, and Institutional Electric Lighting Fixture Manufacturing............................... 600 

335129 ........................... Other Lighting Equipment Manufacturing ........................................................ .............................. 550 

* * * * * * * 

335311 ........................... Power, Distribution, and Specialty Transformer Manufacturing ...................... .............................. 800 

* * * * * * * 

335912 ........................... Primary Battery Manufacturing ........................................................................ .............................. 1,300 

* * * * * * * 

335931 ........................... Current-Carrying Wiring Device Manufacturing .............................................. .............................. 600 

* * * * * * * 

335991 ........................... Carbon and Graphite Product Manufacturing ................................................. .............................. 900 

335999 ........................... All Other Miscellaneous Electrical Equipment and Component Manufacturing............................... 600 

Subsector 336—Transportation Equipment Manufacturing 6

*******

336310 ........................... Motor Vehicle Gasoline Engine and Engine Parts Manufacturing .................. .............................. 1,050 

* * * * * * * 

336414 ........................... Guided Missile and Space Vehicle Manufacturing ......................................... .............................. 1,300 

* * * * * * * 

336419 ........................... Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment 

Manufacturing.

.............................. 1,050 

* * * * * * * 

336611 ........................... Ship Building and Repairing ............................................................................ .............................. 1,300 


jspears on DSK121TN23PROD with PROPOSALS2
Federal Register / Vol. 87, No. 80 / Tuesday, April 26, 2022 / Proposed Rules 24831 

SMALL BUSINESS SIZE STANDARDS BY NAICS INDUSTRY—Continued 

NAICS code NAICS U.S. industry title Size standards in 

millions of dollars 

Size standards 

in number of 

employees 

*******

336991 ........................... Motorcycle, Bicycle, and Parts Manufacturing ................................................ .............................. 1,050 

* * * * * * * 

Subsector 337—Furniture and Related Product Manufacturing 

*******

337125 ........................... Household Furniture (except Wood and Metal) Manufacturing ...................... .............................. 950 

* * * * * * * 

337214 ........................... Office Furniture (except Wood) Manufacturing ............................................... .............................. 1,100 

* * * * * * * 

Subsector 339—Miscellaneous Manufacturing 

*******

339113 ........................... Surgical Appliance and Supplies Manufacturing ............................................. .............................. 800 

* * * * * * * 

339910 ........................... Jewelry and Silverware Manufacturing ........................................................... .............................. 700 

* * * * * * * 

339930 ........................... Doll, Toy, and Game Manufacturing ............................................................... .............................. 700 

* * * * * * * 

339991 ........................... Gasket, Packing, and Sealing Device Manufacturing ..................................... .............................. 600 

* * * * * * * 

339994 ........................... Broom, Brush, and Mop Manufacturing .......................................................... .............................. 750 

* * * * * * * 

339999 ........................... All Other Miscellaneous Manufacturing ........................................................... .............................. 550 

* * * * * * * 

Sector 48–49—Transportation and Warehousing 

*******

Subsector 483—Water Transportation 

483111 ........................... Deep Sea Freight Transportation .................................................................... .............................. 1,050 

* * * * * * * 

483113 ........................... Coastal and Great Lakes Freight Transportation ............................................ .............................. 800 

483114 ........................... Coastal and Great Lakes Passenger Transportation ...................................... .............................. 550 

483211 ........................... Inland Water Freight Transportation ............................................................... .............................. 1,050 

483212 ........................... Inland Water Passenger Transportation ......................................................... .............................. 550 

* * * * * * * 

Sector 51—Information 

Subsector 511—Publishing Industries (except Internet) 

*******

511199 ........................... All Other Publishers ......................................................................................... .............................. 550 

* * * * * * * 

Subsector 512—Motion Picture and Sound Recording Industries 

*******

512230 ........................... Music Publishers ............................................................................................. .............................. 900 


jspears on DSK121TN23PROD with PROPOSALS2
24832 Federal Register / Vol. 87, No. 80 / Tuesday, April 26, 2022 / Proposed Rules 

SMALL BUSINESS SIZE STANDARDS BY NAICS INDUSTRY—Continued 

NAICS code NAICS U.S. industry title Size standards in 

millions of dollars 

Size standards 

in number of 

employees 

*******

512250 ........................... Record Production and Distribution ................................................................ .............................. 900 

* * * * * * * 

Sector 54—Professional, Scientific and Technical Services 

Subsector 541—Professional, Scientific and Technical Services 

*******

541715 ........................... Research and Development in the Physical, Engineering, and Life Sciences 

(except Nanotechnology and Biotechnology) 11.

.............................. 11 1,000 

541715 (Exception 1) ..... Aircraft, Aircraft Engine and Engine Parts 11 .................................................. .............................. 11 1,500 

541715 (Exception 2) ..... Other Aircraft Parts and Auxiliary Equipment 11 ............................................. .............................. 11 1,250 

541715 (Exception 3) ..... Guided Missiles and Space Vehicles, Their Propulsion Units and Propulsion 

Parts 11.

.............................. 11 1,300 

* * * * * * * 

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

*******

Subsector 562—Waste Management and Remediation Services 

*******

562910 (Exception) ........ Environmental Remediation Services 14 .......................................................... .............................. 14 1,000 

* * * * * * * 

Footnotes 

* * * * * * * 6 NAICS Subsectors 333, 334, 335 and 336—For rebuilding machinery or equipment on a factory basis, or equivalent, use the NAICS code for 

a newly manufactured product. Concerns performing major rebuilding or overhaul activities do not necessarily have to meet the criteria for being 

a ‘‘manufacturer’’ although the activities may be classified under a manufacturing NAICS code. Ordinary repair services or preservation are not 

considered rebuilding. 

* * * * * * * 11 NAICS code 541713, 541714, and 541715— 

(a) ‘‘Research and Development’’ means laboratory or other physical research and development. It does not include economic, educational, engineering, operations, systems, or other nonphysical research; or computer programming, data processing, commercial and/or medical laboratory 

testing. 

(b) For research and development contracts requiring the delivery of a manufactured product, the appropriate size standard is that of the manufacturing industry. 

(c) For purposes of the Small Business Innovation Research (SBIR) and Small Business Transfer Technology (STTR) programs, the term ‘‘research’’ or ‘‘research and development’’ means any activity which is (A) a systematic, intensive study directed toward greater knowledge or understanding of the subject studied; (B) a systematic study directed specifically toward applying new knowledge to meet a recognized need; or (C) 

a systematic application of knowledge toward the production of useful materials, devices, and systems or methods, including design, development, and improvement of prototypes and new processes to meet specific requirements. See 15 U.S.C. 638(e)(5) and section 3 of the SBIR and 

STTR policy directives available at www.sbir.gov. For size eligibility requirements for the SBIR and STTR programs, see § 121.702 of this part. 

(d) ‘‘Research and Development’’ for guided missiles and space vehicles includes evaluations and simulation, and other services requiring thorough knowledge of complete missiles and spacecraft. 

* * * * * * * 14 NAICS 562910—Environmental Remediation Services: 

(a) For SBA assistance as a small business concern in the industry of Environmental Remediation Services, other than for Government procurement, a concern must be engaged primarily in furnishing a range of services for the remediation of a contaminated environment to an acceptable condition including, but not limited to, preliminary assessment, site inspection, testing, remedial investigation, feasibility studies, remedial 

design, containment, remedial action, removal of contaminated materials, storage of contaminated materials and security and site closeouts. If 

one of such activities accounts for 50 percent or more of a concern’s total revenues, employees, or other related factors, the concern’s primary 

industry is that of the particular industry and not the Environmental Remediation Services Industry. 

(b) For purposes of classifying a Government procurement as Environmental Remediation Services, the general purpose of the procurement 

must be to restore or directly support the restoration of a contaminated environment (such as, preliminary assessment, site inspection, testing, 

remedial investigation, feasibility studies, remedial design, remediation services, containment, removal of contaminated materials, storage of contaminated materials or security and site closeouts), although the general purpose of the procurement need not necessarily include remedial actions. Also, the procurement must be composed of activities in three or more separate industries with separate NAICS codes or, in some instances (e.g., engineering), smaller sub-components of NAICS codes with separate, distinct size standards. These activities may include, but are 

not limited to, separate activities in industries such as: Heavy Construction; Specialty Trade Contractors; Engineering Services; Architectural 

Services; Management Consulting Services; Hazardous and Other Waste Collection; Remediation Services, Testing Laboratories; and Research 

and Development in the Physical, Engineering and Life Sciences. If any activity in the procurement can be identified with a separate NAICS 

code, or component of a code with a separate distinct size standard, and that industry accounts for 50 percent or more of the value of the entire 

procurement, then the proper size standard is the one for that particular industry, and not the Environmental Remediation Service size standard. 


jspears on DSK121TN23PROD with PROPOSALS2
Federal Register / Vol. 87, No. 80 / Tuesday, April 26, 2022 / Proposed Rules 24833 

* * * * * 

Isabella Casillas Guzman, 

Administrator. 

[FR Doc. 2022–08091 Filed 4–25–22; 8:45 am] 

BILLING CODE 8026–03–P 


jspears on DSK121TN23PROD with PROPOSALS2