[Federal Register Volume 70, Number 217 (Thursday, November 10, 2005)]
[Proposed Rules]
[Pages 68368-68374]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-22430]


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SMALL BUSINESS ADMINISTRATION

13 CFR Part 121

RIN 3245-AF28


Small Business Size Standards; Security Guards and Patrol 
Services

AGENCY: U.S. Small Business Administration.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The U.S. Small Business Administration (SBA) proposes to 
increase the size standard for the Security Guards and Patrol Services 
Industry (North American Industry Classification System (NAICS) 561612)

[[Page 68369]]

from $10.5 million in average annual receipts to $15.5 million. The 
proposed revision is being made to better define the size of business 
in this industry based on a review of industry characteristics.

DATES: Comments must be received by SBA on or before December 12, 2005.

ADDRESSES: You may submit comments, identified by RIN 3245-AF28 by any 
of the following methods: (1) Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments; 
(2) Fax: (202) 205-6390; or (3) Mail/Hand Delivery/Courier: Gary M. 
Jackson, Assistant Administrator for Size Standards, 409 Third Street, 
SW., Mail Code 6530, Washington, DC 20416.

FOR FURTHER INFORMATION CONTACT: Carl Jordan or Diane Heal, Office of 
Size Standards, (202) 205-6618 or <a href="/cdn-cgi/l/email-protection#8efde7f4ebfdfaefe0eaeffceafdcefdecefa0e9e1f8"><span class="__cf_email__" data-cfemail="c9baa0b3acbabda8a7ada8bbadba89baaba8e7aea6bf">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: The U.S. Small Business Administration (SBA) 
has received requests from firms in the Security Guards and Patrol 
Services Industry (referred to as the Security Guards Industry) to 
review the current $10.5 million size standard. This size standard was 
last revised in 2002 to incorporate an inflation adjustment to receipt-
based size standards (67 FR 3041, January 23, 2002). These firms 
believe that a size standard increase is warranted due to the increased 
costs of complying with Federal agency requirements for security 
guards, increased number of large security firms competing for Federal 
contracts, and the relative success by large firms in winning Federal 
contracts. These firms also believe that these industry trends would 
shrink the pool of eligible small businesses causing Federal agencies 
to scale back their use of small business preferences in Federal 
procurement. Below is a discussion of the methodology used by SBA to 
review its size standards, and the analysis leading to the proposal to 
increase the Security Guards Industry's size standard to $15.5 million.
    Size Standards Methodology: Congress granted SBA discretion to 
establish detailed size standards (15 U.S.C. 632(a)(2)). SBA's Standard 
Operating Procedure (SOP) 90 01 3, ``Size Determination Program'' 
(available on SBA's web site at  http://www.sba.gov/library/soproom.html) describes four factors for establishing and evaluating 
size standards: (1) The structure of the industry and its various 
economic characteristics; (2) SBA program objectives and the impact of 
different size standards on these programs; (3) whether a size standard 
successfully excludes those businesses which are dominant in the 
industry; and (4) other factors if applicable. Other factors, including 
the impact on other Federal agencies' programs, may come to the 
attention of SBA during the public comment period or from SBA's own 
research on the industry. No formula or weighting has been adopted so 
that the factors may be evaluated in the context of a specific 
industry. Below is a discussion of SBA's analysis of the economic 
characteristics of an industry, the impact of a size standard on SBA 
programs, and the evaluation of whether a firm at or below a size 
standard could be considered dominant in the industry under review.
    Industry Analysis: Section 3(a)(3) of the Small Business Act (15 
U.S.C. 632 (a)(3)), requires that size standards vary by industry to 
the extent necessary to reflect differing industry characteristics. SBA 
has two ``base'' or ``anchor'' size standards that apply to most 
industries--500 employees for manufacturing industries and $6 million 
in average annual receipts for nonmanufacturing industries. SBA 
established 500 employees as the anchor size standard for the 
manufacturing industries at SBA's inception in 1953 and shortly 
thereafter established a $1 million average annual receipts size 
standard for the nonmanufacturing industries. The receipts-based anchor 
size standard for the nonmanufacturing industries has been adjusted 
periodically for inflation so that, currently, the anchor size standard 
is $6 million. Anchor size standards are presumed to be appropriate for 
an industry unless its characteristics indicate that larger firms have 
a much greater significance within that industry than the ``typical 
industry.''
    When evaluating a size standard, the characteristics of the 
specific industry under review are compared to the characteristics of a 
group of industries, referred to as a ``comparison group.'' A 
comparison group is a large number of industries grouped together to 
represent the typical industry. It can be comprised of all industries, 
all manufacturing industries, all industries with receipt-based size 
standards, or some other logical grouping.
    If the characteristics of a specific industry are similar to the 
average characteristics of the comparison group, then the anchor size 
standard is considered appropriate for the industry. If the specific 
industry's characteristics are significantly different from the 
characteristics of the comparison group, a size standard higher or, in 
rare cases, lower than the anchor size standard may be considered 
appropriate. The larger the differences between the specific industry's 
characteristics and the comparison group's characteristics, the larger 
the difference between the appropriate industry size standard and the 
anchor size standard. SBA will consider adopting a size standard below 
the anchor size standard only when (1) all or most of the industry 
characteristics are significantly smaller than the average 
characteristics of the comparison group, or (2) other industry 
considerations strongly suggest that the anchor size standard would be 
an unreasonably high size standard for the industry under review.
    The primary evaluation factors that SBA considers in analyzing the 
structural characteristics of an industry include average firm size, 
distribution of firms by size, start-up costs, and industry competition 
(13 CFR 121.102(a) and (b)). SBA also examines the possible impact of a 
size standard revision on SBA's programs as an evaluation factor. SBA 
generally considers these five factors to be the most important 
evaluation factors in establishing or revising a size standard for an 
industry. However, it will also consider and evaluate other information 
that it believes relevant to the decision on a size standard for a 
particular industry. Public comments submitted on proposed size 
standards are also an important source of additional information that 
SBA closely reviews before making a final decision on a size standard. 
Below is a brief description of each of the five evaluation factors.
    1. ``Average firm size'' is simply total industry receipts (or 
number of employees) divided by the number of firms in the industry. If 
the average firm size of an industry is significantly higher than the 
average firm size of a comparison industry group, this fact would be 
viewed as supporting a size standard higher than the anchor size 
standard. Conversely, if the industry's average firm size is similar to 
or significantly lower than that of the comparison industry group, it 
would be a basis to adopt the anchor size standard or, in rare cases a 
lower size standard.
    2. ``Distribution of firms by size'' is the proportion of industry 
receipts, employment, or other economic activity accounted for by firms 
of different sizes in an industry. If the preponderance of an 
industry's economic activity attributed by smaller firms, this tends to 
support adopting the anchor size standard. A size standard higher than 
the anchor size standard is supported for an industry in which the 
distribution of firms indicates that economic activity

[[Page 68370]]

is concentrated among the largest firms in an industry.
    In this proposed rule, SBA examines the percent of total industry 
sales cumulatively generated by firms up to a certain level of sales. 
For example, assume for the industry under review that 30 percent of 
total industry sales are generated by firms of less than $10 million in 
sales. This statistic is compared to a comparison group. For the 
nonmanufacturer anchor comparison group (used in this proposed rule), 
firms of less than $10 million in sales cumulatively generated 49.4 
percent of total industry sales. Viewed in isolation, the lower figure 
for the industry under review indicates the presence of larger-sized 
firms in this industry than firms in the industries in the 
nonmanufacturing anchor size standards comparison group and, therefore, 
a higher size standard may be warranted.
    3. ``Start-up costs'' affect a firm's initial size because entrants 
into an industry must have sufficient capital to start and maintain a 
viable business. To the extent that firms entering into one industry 
have greater financial requirements than firms do in other industries, 
SBA is justified in considering a higher size standard. In lieu of 
direct data on start-up costs, SBA uses a proxy measure to assess the 
financial burden for entry-level firms. For this analysis, SBA has 
calculated average firm assets within an industry. Data from the Risk 
Management Association's Annual Statement Studies, 2000-2001, provide 
average sales to total assets ratios. These were applied to the average 
receipts size of firm in an industry to estimate average firm assets. 
An industry with a significantly higher level of average firm assets 
than that of the comparison group is likely to have higher start-up 
costs, which would tend to support a size standard higher than the 
anchor size standard. Conversely, if the industry showed a 
significantly lower level of average firm assets when compared to the 
comparison group, the anchor size standard would be considered the 
appropriate size standard, or in rare cases a lower size standard.
    4. ``Industry competition'' is assessed by measuring the proportion 
or share of industry receipts obtained by firms that are among the 
largest firms in an industry. In this proposed rule, SBA compares the 
proportion of industry receipts generated by the four largest firms in 
the industry--generally referred to as the ``four-firm concentration 
ratio''--to the average four-firm concentration ratio for industries in 
the comparison groups. If a significant proportion of economic activity 
within the industry is concentrated among a few relatively large 
producers, SBA tends to set a size standard relatively higher than the 
anchor size standard in order to assist firms in a broader size range 
to compete with firms that are larger and more dominant in the 
industry. In general, however, SBA does not consider this to be an 
important factor in assessing a size standard if the four-firm 
concentration ratio falls below 40 percent for an industry under 
review.
    5. ``Impact of a size standard revision on SBA programs'' refers to 
the possible impact a size standard change may have on the level of 
small business assistance. This assessment most often focuses on the 
proportion or share of Federal contract dollars awarded to small 
businesses in the industry in question. In general, the lower the share 
of Federal contract dollars awarded to small businesses in an industry 
which receives significant Federal contracting revenues, the greater is 
the justification for a size standard higher than the existing one.
    Another factor to evaluate the impact of a proposed size standard 
on SBA's programs is the volume of guaranteed loans within an industry 
and the size of firms obtaining those loans. This factor is sometimes 
examined to assess whether the current size standard may be restricting 
the level of financial assistance to firms in that industry. If small 
businesses receive significant amounts of assistance through these 
programs, or if the financial assistance is provided mainly to small 
businesses much lower than the size standard, a change to the size 
standard (especially if it is already above the anchor size standard) 
may not be necessary.
    Evaluation of Industry Size Standard: The two tables below show the 
industry structure characteristics for the Security Guards Industry and 
for two comparison groups. The first comparison group is comprised of 
all industries with a $6 million receipts-based size standard referred 
to as the nonmanufacturing anchor group. Since SBA's size standards 
analysis is assessing whether the Security Guards Industry's size 
standard should be moderately higher, or much higher than the 
nonmanufacturing anchor size standard, this is the most logical set of 
industries to group together for the industry analysis. In addition, 
this group includes a sufficient number of firms to afford a meaningful 
assessment and comparison of industry characteristics. The second 
comparison group consists of the nonmanufacturing industries with the 
highest receipt-based size standards established by SBA. SBA refers to 
this comparison group as the ``nonmanufacturing higher-level size 
standard group.'' This group's size standards range from $21 million to 
$30 million. If an industry's characteristics are significantly larger 
than those of the nonmanufacturing anchor group, SBA will compare them 
to the characteristics of the higher-level size standards group. By 
doing so, SBA can assess whether a size standard should be among the 
highest size standards or somewhere between the anchor size standard 
and the highest size standards.
    For its analysis, SBA examined 2002 industry data prepared for 
SBA's Office of Advocacy by the U.S. Bureau of the Census (http://www.sba.gov/advo/research/us_rec02.txt), data from a U.S. Bureau of 
the Census report ``Investigation and Security Services: 2002'', 
(Report EC02-561-06), and data from the Risk Management Association's 
Annual Statement Studies, 2000-2001. SBA also examined Federal contract 
award data for fiscal years 2002-2004 from the U.S. General Service 
Administration's Federal Procurement Data Center, and SBA's internal 
loan database on SBA guaranteed loans during fiscal year 2004.
    Security Guards Industry Structure Considerations: Table 1 shows 
data on three evaluation factors for the Security Guards Industry and 
the two comparison groups. These factors are average firm size, average 
firm assets, and the four-firm concentration ratio.

                        Table 1.--Selected Industry Characteristics by Industry Category
----------------------------------------------------------------------------------------------------------------
                                                                                                     Four-firm
                                                                   Average firm    Average firm    concentration
                        Industry category                          size receipts      assets           ratio
                                                                    (millions)      (millions)       (percent)
----------------------------------------------------------------------------------------------------------------
Security Guards and Patrol Services.............................           $2.81           $0.43            32.7
Nonmanufacturing Anchor Group...................................            1.29            0.60            14.4

[[Page 68371]]

 
Higher-level Size Standard Group................................            4.73            2.00            26.4
----------------------------------------------------------------------------------------------------------------

    For the Security Guards Industry, its average firm size in receipts 
is more than twice that of the average firm size in the nonmanufacturer 
anchor group, but significantly lower than the average firm size in the 
higher-level size standards group. This factor indicates a size 
standard within a range of $13 to $15 million may be appropriate, which 
is slightly more than double the $6 million anchor size standard. The 
average firm assets factor is below the nonmanufacturing anchor group 
and does not provide a basis for increasing the current size standard. 
The four-firm concentration ratio provides some support for a change to 
the current size standard. While the factor is appreciably higher than 
the average industry in the two comparison groups, it is not at a 
sufficient level to suggest that larger firms in the industry could 
control the industry through pricing or other forms of collaboration 
nor that a very substantial increase to the size standard should be 
considered. In relation to the higher-level size standards group, the 
four-firm concentration ratio suggests a standard higher than $10.5 
million is reasonable. The level of the size standard, however, should 
be based on the consideration of the other evaluation factors.
    Table 2 below examines the size distribution of firms. For this 
factor, SBA evaluates the percent of total sales cumulatively generated 
by firms at or below specific receipts sizes. For example, firms in the 
Security Guards Industry with $10 million or less in receipts 
cumulatively obtained 27.1 percent of total industry sales. Within the 
nonmanufacturing anchor group, these size firms captured 49.4 percent 
of total industry sales while similar firms in the higher-level size 
standards group captured 21.1 percent.

                           Table 2.--Percentage Distribution of Firms by Receipts Size
----------------------------------------------------------------------------------------------------------------
                                                               Percent of industry sales by firm of
               Industry category                ----------------------------------------------------------------
                                                  < $1  million   < $5  million  < $10  million   < $50  million
----------------------------------------------------------------------------------------------------------------
Security Guards................................            7.0%           19.4%           27.1%            43.9%
Nonmanufacturing Anchor Group..................           16.8%           39.9%           49.4%            63.7%
Higher-level Size Standard Group...............            3.8%           13.3%           21.1%            40.4%
----------------------------------------------------------------------------------------------------------------

    The distribution of sales for the Security Guards Industry show the 
presence of larger-sized firms than in the nonmanufacturer anchor 
group, but not as large as those in the higher-level size standards 
group. The data for the less than $1 million and less than $5 million 
size classes support a size standard well above the anchor size 
standard, but below the higher-level size standards ranges. The other 
two size classes, less than $10 million and less than $50 million, 
support a size standard at or near the higher-level size standards 
range. Considering the overall distributions across size classes, an 
appropriate size standard appears to be near, but below, the higher-
level size standards group, such as between $18 million to $20 million.
    SBA Program Considerations: SBA also considers the potential impact 
of changing a size standard on its programs. Because SBA's review of 
the Security Guards Industry's size standard was prompted by concerns 
about the application of the size standard to Federal contracting, SBA 
examines the pattern of Federal contract awards to small businesses as 
one of the factors in evaluating whether the size standard should be 
revised. The findings provide mixed support for a change to the current 
size standard.
    Small businesses in the Security Guards Industry received 37.2 
percent of the total dollar value of Federal contracts awarded during 
fiscal years (FY) 2003 and 2004. This share is moderately higher than 
the 28 percent of sales cumulative generated by firms at or below the 
current $10.5 million size standard. This performance indicates that 
small businesses as currently defined have not encountered substantial 
difficulties in obtaining Federal contracts, and does not provide a 
basis for revising the size standard.
    SBA also evaluated specific contract data available for FY 2002 and 
2003 to assess the concern that Federal contracts may be concentrated 
among a few firms. The data revealed some degree of concentration may 
exist. Between 400 and 500 businesses received security guard contracts 
in those two years. In FY 2002, three businesses captured two-thirds of 
the dollar value of Federal security guard contracts. However, in FY 
2003, the top three large businesses obtained only 38 percent. Only one 
large business was among the top three contractors in both years. These 
contracting patterns indicate that one large business is the top 
contractor for Federal security guard contracts, but both large and 
small businesses have many opportunities. As with the assessment of the 
factor of industry concentration discussed above, the distribution of 
Federal contracts suggests that a standard higher than $10.5 million is 
a reasonable change, but does not provide a basis to significantly 
depart from the level indicated by the analysis of the industry 
evaluation factors.
    SBA also reviewed data on its financial assistance to small 
businesses in this industry. In FY 2003 and 2004, SBA guaranteed an 
average of 75 loans for $10.8 million in the Security Guards Industry. 
Ninety percent of these loans were made to firms less than half the 
current size standard. It is unlikely that an increase to the size 
standard would have an appreciable impact on the financial programs, 
and therefore, this factor is not part of the assessment of this 
industry's size standard.
    SBA Proposal: Based on the analysis of each evaluation factor, SBA 
is proposing a $15.5 million size standard--a $5 million increase (47 
percent) to the current size standard. Three of the five evaluation 
factors

[[Page 68372]]

support a size standard higher than the current $10.5 million size 
standard, while the other two factors support no change. SBA believes 
the presence of large-sized firms in the industry, as depicted by the 
factors of average size firm, the distribution of firms by size, and 
four-firm concentration ratio, is sufficiently strong to support a 
moderate change to the current size standard. The proposed size 
standard represents an average of the lower range of potential size 
standards indicated by the average firm size and size distribution 
factors.
    Dominant in Field of Operation: Section 3(a) of the Small Business 
Act defines a small concern as one that is (1) independently owned and 
operated, (2) not dominant in its field of operations and (3) within 
detailed definitions or size standards established by the SBA 
Administrator. SBA considers as part of its evaluation of a size 
standard whether a business concern at or below a size standard would 
be considered dominant in its field of operation. This assessment 
generally considers the market share of firms at the proposed or final 
size standard, or other factors that may show whether a firm can 
exercise a major controlling influence on a national basis in which 
significant numbers of business concerns are engaged.
    SBA has determined that no firm at or below the proposed size 
standard for the Security Guards Industry would be of a sufficient size 
to dominate its field of operation. The largest firm at the size 
standard level generates less than 0.11 percent of total industry 
receipts. This level of market share effectively precludes any ability 
for a firm at or below the proposed size standard from exerting a 
controlling effect on this industry.
    Alternative Size Standards: SBA considered an alternative size 
standard based on average number of employees instead of average annual 
receipts. This approach was considered in a proposed rule of March 19, 
2004 (69 FR 13130) as part of restructuring of size standards. Because 
of the large proportion of part-time employees in this industry, SBA 
has decided to retain average annual receipts as the size standard 
measure. A receipts-based size standard treats firms more equitably 
because firms vary on the use of part-time employees and 
subcontractors. An employee size standard could unintentionally 
influence decisions of some firms to alter the use of part-time 
employees and subcontractors to retain their status as small 
businesses.
    SBA welcomes public comments on its size standard for the Security 
Guards Industry. Comments on alternatives, including the option of 
retaining the size standard at $10.5 million or establishing an 
employee-based size standards as discussed above, should explain why 
the alternative would be preferable to the proposed size standard.

Compliance With Executive Orders 12866, 12988, and 13132, the Paperwork 
Reduction Act (44 U.S.C. Ch. 35), and the Regulatory Flexibility Act (5 
U.S.C. 601-612)

    The Office of Management and Budget (OMB) has determined that this 
proposed rule is not a ``significant'' regulatory action for purposes 
of Executive Order 12866. For the purpose of the Paperwork Reduction 
Act, 44 U.S.C. Ch. 35, SBA has determined that this rule would not 
impose new reporting or recordkeeping requirements, other than those 
required of SBA. For purposes of Executive Order 13132, SBA has 
determined that this rule does not have any Federalism implications 
warranting the preparation of a federalism assessment. For purposes of 
Executive Order 12988, SBA has determined that this rule is drafted, to 
the extent practicable, in accordance with the standards set forth in 
that Order.

Initial Regulatory Flexibility Analysis

    Under the Regulatory Flexibility Act (RFA), this rule, if 
finalized, may have a significant impact on a substantial number of 
small entities engaged in the Security Guards Industry. As described 
above, this rule may impact small entities seeking SBA (7a) and 504 
Guaranteed Loan Programs, its Economic Impact Disaster Loans, and SBA 
and other Federal small business procurement preference programs. Newly 
defined small businesses would benefit from SBA's 7(a) and 504 
Guaranteed Loan Programs. SBA estimates that one or two additional 
loans totaling $1 million or less in new Federal loan guarantees could 
be made to these newly defined small businesses. Because of the size of 
the loan guarantees, most loans are made to small businesses well below 
the size standard. Thus, increasing the size standard will likely 
result in only a small increase in small business guaranteed loans to 
businesses in this industry, and the $1 million estimate may overstate 
the actual impact. These additional loan guarantees, because of their 
limited magnitude, will have virtually no impact on the overall 
availability of loans for SBA's loan programs, which have averaged 
about 88,000 loans totaling more than $17 billion in fiscal year 2004.
    The size standard may also affect small businesses participating in 
programs of other agencies that use SBA size standards. As a practical 
matter, however, SBA cannot estimate the impact of a size standard 
change on each and every Federal program that uses its size standards. 
Immediately below, SBA sets forth an initial regulatory flexibility 
analysis (IRFA) of this proposed rule on the Security Guards Industry 
addressing the following questions: (1) What is the need for and 
objective of the rule, (2) what is SBA's description and estimate of 
the number of small entities to which the rule will apply, (3) what is 
the projected reporting, recordkeeping, and other compliance 
requirements of the rule, (4) what are the relevant Federal rules which 
may duplicate, overlap or conflict with the rule and (5) what 
alternatives will allow the Agency to accomplish its regulatory 
objectives while minimizing the impact on small entities?

(1) What is the need for and objective of the rule?

    The revision to the size standard for the Security Guards Industry 
more appropriately defines the size of businesses in this industry that 
SBA believes should be eligible for Federal small business assistance 
programs. SBA reviewed the structure of this industry using five 
factors that were compared with averages for two groups of industries. 
A review of the latest available data supports a change to the current 
size standard.

(2) What is SBA's description and estimate of the number of small 
entities to which the rule will apply?

    SBA estimates that 50 additional firms out of 4,853 firms in this 
industry would be considered small as a result of this rule, if 
adopted. The firms would be eligible to seek available SBA assistance 
provided that they meet other program requirements. Firms becoming 
eligible for SBA assistance as a result of this rule, if finalized, 
cumulatively generate $790 million in this industry out of a total of 
$13.6 billion in annual receipts. The small business coverage in this 
industry would increase by 5.8 percent of total receipts. Also, SBA 
estimates that approximately 100 small businesses that are within 20 
percent of the existing size standard could grow and retain their small 
business status if this proposed rule were adopted.

[[Page 68373]]

(3) What are the projected reporting, recordkeeping, and other 
compliance requirements of the rule and an estimate of the classes of 
small entities which will be subject to the requirements?

    A new size standard does not impose any additional reporting, 
recordkeeping or compliance requirements on small entities. Increasing 
size standards expands access to SBA programs that assist small 
businesses, but does not impose a regulatory burden as they neither 
regulate nor control business behavior.

(4) What are the relevant Federal rules which may duplicate, overlap or 
conflict with the rule?

    This proposed rule overlaps with other Federal rules that use SBA's 
size standards to define a small business. Under Sec.  3(a)(2)(C) of 
the Small Business Act, 15 U.S.C. 632(a)(2)(c), unless specifically 
authorized by statute, Federal agencies must use SBA's size standards 
to define a small business. In 1995, SBA published in the Federal 
Register a list of statutory and regulatory size standards that 
identified the application of SBA's size standards as well as other 
size standards used by Federal agencies (60 FR 57988-57991, dated 
November 24, 1995). SBA is not aware of any Federal rule that would 
duplicate or conflict with establishing size standards.
    Other Federal agencies also may use SBA size standards for a 
variety of regulatory and program purposes. If such a case exists where 
an SBA size standard is not appropriate, an agency may establish its 
own size standards with the approval of the SBA Administrator (see 13 
CFR 121.902-903). For purposes of a regulatory flexibility analysis, 
agencies must consult with SBA's Office of Advocacy when developing 
different size standards for their programs (13 CFR 121.902(b)(4)).

(5) What alternatives will allow the Agency to accomplish its 
regulatory objectives while minimizing the impact on small entities?

    SBA considered an alternative size standard based on average number 
of employees instead of average annual receipts. It also considered a 
range of size standards as part of the assessment of each evaluations 
factor. Because of the large proportion of part-time employees in this 
industry, an employee size standard could unintentionally influence 
decisions of some firms to alter the use of part-time employees and 
subcontractors to remain as small businesses. SBA believes that a 
moderate increase to the size standard will assist businesses that 
should be included as small businesses and small businesses that are 
growing. In selecting the proposed size standard, currently defined 
small businesses will not be competitively disadvantaged as compared to 
a much higher size standard.
    SBA welcomes comments on other alternatives that minimize the 
impact of this rule on small businesses and achieve the objectives of 
this rule. These comments should describe the alternative and explain 
why it is preferable to this proposed rule.

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 
part 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(a), 634(b)(6), 636(b), 637(a), 644(c), 
and 662(5); and Sec. 304, Pub. L. 103-403, 108 Stat. 4175, 4188, 
Pub. L. 106-24, 113 Stat. 39.

    2. In Sec.  121.201, in the table ``Small Business Size Standards 
by NAICS Industry,'' under the heading ``Subsector 561--Administrative 
and Support Services,'' revise the entry for 561612 to read as follows:


Sec.  121.201  What size standards has SBA identified by North American 
Industry Classification System codes?

                                 Small Business Size Standards by NAICS Industry
----------------------------------------------------------------------------------------------------------------
                                                                                  Size standards  Size standards
                  NAICS codes                       NAICS U.S. industry title     in millions of   in number of
                                                                                      dollars        employees
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
-----------------------------------------------
                               Subsector 561--Administrative and Support Services
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
561612........................................  Security Guards and Patrol                 $15.5
                                                 Services.
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------



[[Page 68374]]

    Dated: November 3, 2005.
Hector V. Barreto,
Administrator.
[FR Doc. 05-22430 Filed 11-9-05; 8:45 am]
BILLING CODE 8025-01-P


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