[Federal Register Volume 75, Number 193 (Wednesday, October 6, 2010)]
[Rules and Regulations]
[Pages 61591-61597]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-24860]


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SMALL BUSINESS ADMINISTRATION

13 CFR Part 121

RIN 3245-AF70


Small Business Size Standards; Other Services.

AGENCY: U.S. Small Business Administration.

ACTION: Final rule.

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SUMMARY: The United States Small Business Administration (SBA) is 
increasing the small business size standards for 18 industries in North 
American Industry Classification System (NAICS) Sector 81, Other 
Services, and retaining the current standards for the remaining 30 
industries in the Sector. As part of its ongoing initiative to review 
all size standards, SBA has evaluated every industry in NAICS Sector 81 
to determine whether the existing size standards should be retained or 
revised.

DATES: This rule is effective November 5, 2010.

FOR FURTHER INFORMATION CONTACT: Carl Jordan, Program Analyst, Office 
of Size Standards, (202) 205-6618 or <a href="/cdn-cgi/l/email-protection#c4b7adbea1b7b0a5aaa0a5b6a0b784b7a6a5eaa3abb2"><span class="__cf_email__" data-cfemail="2e5d47544b5d5a4f404a4f5c4a5d6e5d4c4f00494158">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: 

Introduction

    To determine eligibility for Federal small business assistance 
programs, SBA establishes small business size definitions (referred to 
as size standards) for private sector industries in the United States. 
SBA's existing size standards use two primary measures of business 
size--receipts and number of employees. Financial assets, electric 
output and refining capacity are used as size measures for a few 
specialized industries. In addition, SBA's Small Business Investment 
Company (SBIC) and the Certified Development Company (CDC) Programs 
determine small business eligibility using either the industry based 
size standards or net worth and net income size standards. Currently, 
SBA's size standards consist of 45 different size levels, covering 
1,141 NAICS industries and 17 sub-industry activities. Of these size 
levels, 32 are based on average annual receipts, eight are based on 
number of employees, and five are based on other measures. In addition, 
SBA has established 11 other size standards for its financial and 
procurement programs.
    Over the years, SBA has received comments that its size standards 
have not kept up with changes in the economy and, in particular, that 
they do not reflect changes in the Federal contracting marketplace. The 
last overall review of size standards occurred during the late 1970s 
and early 1980s. Since then, most reviews of size standards have been 
limited to in-depth analyses of specific industries in response to 
requests from the public and Federal agencies. SBA also makes periodic 
inflation adjustments to its monetary based size standards. The latest 
inflation adjustment to size standards was published in the Federal 
Register on July 18, 2008 (73 FR 41237).
    SBA recognizes that changes in industry structure and the Federal 
marketplace over time have rendered existing size standards for some 
industries no longer supportable by current data. Accordingly, SBA has 
begun a comprehensive review of its size standards to determine whether 
existing size standards have supportable bases relative to the current 
data, and, where necessary, to make revisions to current size 
standards. Rather than review all size standards at one time, SBA has 
taken a more manageable approach to reviewing a group of related 
industries within an NAICS Sector in phases. SBA expects to complete 
its review of all NAICS Sectors in two years.
    As part of its ongoing effort to review all small business size 
standards, SBA evaluated every industry in NAICS Sector 81, Other 
Services, to determine whether the existing size standards should be 
retained or revised, and published a proposed rule for public comment 
in the October 21, 2009 issue of Federal Register (74 FR 53941) to 
increase the standards for 18 industries in that Sector. The proposed 
rule was one of a series of proposals that will examine industries 
grouped by an NAICS Sector. SBA also published concurrently in the same 
October 21, 2009 issue of the Federal Register proposed rules to 
increase 47 small business size standards in NAICS Sector 44-45, Retail 
Trade, (74 FR 53924) and five standards in NAICS Sector 72, 
Accommodation and Food Services (74 FR 53913). Similarly, SBA is 
publishing final rules on NAICS Sector 44-45 and NAICS Sector 72 
elsewhere in this issue of the Federal Register.
    In addition, SBA established its ``Size Standards Methodology'' for 
reviewing small business size standards and modifying them, where 
necessary. SBA published in the October 21, 2009 issue of the Federal 
Register (74 FR 53940) a notice of its availability, for public 
comments, on SBA's Web site at  http://www.sba.gov/contractingopportunities/officials/size/index.html. In addition, SBA 
has placed a copy of its ``Size Standards Methodology'' in the 
electronic docket of this rule on  http://www.regulations.gov and is 
available there as well.
    In evaluating an industry's size standard, SBA examines the 
industry's characteristics (such as average firm size, startup costs, 
industry competition and distribution of firms by size), Federal 
government contracting trends, impact on SBA financial assistance 
programs, and dominance in field of operations. SBA analyzed the 
characteristics of each industry in NAICS Sector 81 mostly using a 
special tabulation obtained from the U.S. Bureau of the Census from its 
2002 Economic Census (the latest available). SBA evaluated Federal 
contracting trends in that Sector using the data from the Federal 
Procurement Data System--Next Generation (FPDS-NG) for fiscal years 
2006-2008. To evaluate the impact of changes to size standards on its 
loan programs, SBA analyzed internal data on its guaranteed loan 
programs for fiscal years 2006-2008.
    SBA's ``Size Standards Methodology'' provides a detailed 
description of analyses of various industry and program factors and 
data sources and derivation of size standards using the results. In the 
proposed rule itself, SBA detailed how it applied its ``Size

[[Page 61592]]

Standards Methodology'' to review, and to modify where necessary, the 
existing standards for the Sector and Industries under analysis.
    SBA sought comments from the public on a number of issues about its 
``Size Standards Methodology,'' such as whether there are alternative 
methodologies that SBA should consider; whether there are alternative 
or additional factors or data sources that SBA should evaluate; whether 
SBA's approach to establishing small business size standards makes 
sense in the current economic environment; whether SBA's definitions of 
anchor size standards are appropriate in the current economy; whether 
there are gaps in SBA's methodology because of the lack of 
comprehensive data; and whether there are other facts or issues that 
SBA should consider in its methodology.
    SBA did not receive any comments on its ``Size Standards 
Methodology.'' SBA continues to welcome comments from interested 
parties.
    In the proposed rule, based on its analyses of the latest industry 
and relevant data SBA proposed to increase 18 of the 48 size standards 
in NAICS Sector 81. SBA's analyses supported retaining the existing 
size standards for nine industries. As noted in the proposed rule, 
SBA's analyses would support reducing size standards for the remaining 
20 industries in the Sector. However, as the proposed rule pointed out, 
SBA believes that lowering size standards and thereby reducing the 
number of firms eligible to participate in Federal small business 
assistance programs would run counter to what the Agency is doing to 
help small businesses. Therefore, SBA proposed to retain the existing 
size standards for those 20 industries. Because of similarities between 
NAICS 811212, Computer and Office Machine Repair and Maintenance, and 
several computer services related industries in NAICS Sector 54, 
Professional, Technical and Scientific Services, SBA decided to review 
the size standard for that Industry when it reviews size standards for 
computer related services in NAICS Sector 54. SBA proposed to retain 
the current $25 million standard for that industry until it reviews 
that Sector.

Summary of Comments

    The proposed rule sought comments from the public on SBA's proposal 
to increase size standards for the 18 industries in NAICS Sector 81, 
Other Services, and retain the size standards for remaining 30 
industries in that Sector. SBA also requested comments on whether it 
should simplify size standards by reducing them to eight fixed levels. 
SBA received three comments, one of which supported the proposed 
standards and two did not. Each of these comments is discussed below.
    One commenter supported using Federal contracting as one of the 
factors SBA considers when determining size standard because it is 
``consistent with the statutory guidance that encourages an industry-
by-industry analysis.'' The commenter was referring to the Small 
Business Act (Act) which states in Sec.  3(a)(3) that ``the [SBA] 
Administrator shall ensure that the size standard varies from industry 
to industry to the extent necessary to reflect the differing 
characteristics of the various industries and consider other factors 
deemed to be relevant by the Administrator.'' (15 U.S.C. 632(a)(3))
    The commenter suggested that SBA establish ``a separate size 
standard for Federal procurement within each industry category or 
specific NAICS code.'' SBA does not concur with this comment for 
several reasons. First, SBA believes that having separate size 
standards for each industry for Federal procurement and other programs 
would create confusion and unnecessary complexity, and it would run 
counter to SBA's ongoing effort to simplify its size standards. Second, 
SBA's current methodology examines the Federal procurement market as 
one of the five primary factors in setting size standards for most 
industries. Third, SBA has established separate size standards for 
Federal procurement purposes within certain NAICS Sectors and 
Industries. For example, for the Retail Trade and Wholesale Trade 
Sectors, the 500 employee nonmanufacturer size standard applies for 
procurements of manufactured products, and industry standards in those 
sectors are generally used for SBA financial assistance programs. In 
addition, for those industries where there is a need for significantly 
different size standards for Federal procurement, they already exist. 
SBA has in the past recognized the need for standards that apply only 
to Federal procurement in certain industries, because the existing 
standards, while appropriate for other Federal programs, were not 
suitable for procurement purposes. Currently there are 18 
``exceptions'' in the Agency's table of size standards that relate 
directly to Federal procurement opportunities for small businesses. 
Fourth, establishing separate size standards within each industry for 
businesses that participate in Federal procurement and those that 
participate in other programs is almost impractical due to lack of 
necessary data. For example, the Economic Census data that SBA uses to 
evaluate industry characteristics are limited to the six-digit NAICS 
level. Similarly, the Federal procurement data from the FPDS-NG are 
limited to identifying each contracting firm as ``small'' or ``other 
than small'' only, with no information on its specific firm size (i.e., 
the number of employees and average annual revenues) that would be 
needed to establish a separate size standard for Federal procurement 
purposes.
    The commenter also addressed the size standards for NAICS code 
811213, Communication Equipment Repair and Maintenance, and NAICS code 
811212, Computer and Office Repair Maintenance. SBA had proposed to 
increase the standard for NAICS 811213 from $7 million to $10 million 
in average annual receipts but did not propose to modify the standard 
for NAICS 811212. There are similarities among NAICS 811212 and several 
computer services related industries in Sector 54 (NAICS 541211, NAICS 
541212, NAICS 541213 and NAICS 541219), as SBA detailed in the proposed 
rule. Based on those similarities those four Sector 54 industries and 
NAICS 811212 have shared a $25 million size standard since SBA last 
reviewed the computer related services industries. SBA will review the 
size standard for NAICS 811212 when it next reviews computer related 
services in NAICS Sector 54. Therefore, SBA proposed to retain the 
current $25 million standard for NAICS 811212 until it reviews Sector 
54.
    The commenter supported the current $25 million common size 
standard for NAICS 811212, but requested SBA to apply the same $25 
million size standard to NAICS 811213 and defer changing the current $7 
million size standard for that industry as well until the Agency 
analyzes and reviews size standards for the information technology 
industries in Sector 54. SBA is adopting the proposed $10 million for 
NAICS 811213 because it believes it should not defer its increase on 
the basis of what it might determine is appropriate for industries in 
another Sector that it has not yet analyzed. Furthermore, for Federal 
government procurement purposes, the size standard applicable to a 
contracting opportunity is determined by the principal purpose of the 
procurement. See 13 CFR 121.402. It is not unusual for companies to 
perform contracts in different NAICS codes that have different size 
standards. The Central Contractor Registration database shows that many 
companies can be small for some NAICS codes and not small for others.

[[Page 61593]]

    NAICS is a production oriented system and classifies companies by 
their economic activity, that is, by how they produce their products 
and provide their services. Therefore, economic activities of 
businesses classified in NAICS 811213 are more closely akin to 
businesses classified in NAICS Sector 81 than they are to businesses 
classified in other Sectors. Larger companies can and do perform 
contracts under NAICS codes in different Sectors and Industries with 
various size standards--some higher, some lower than others. However, 
SBA believes it cannot logically conclude that the lower size standards 
ought to be increased. The same reasoning might lead to lowering the 
higher size standards.
    Based on the analysis according to its ``Size Standards 
Methodology,'' SBA has determined that $10 million is the appropriate 
size standard for NAICS 811213. SBA believes that, at this level, there 
exists a sufficient population of small firms that can compete among 
themselves for opportunities that provide benefits for small 
businesses. Much larger companies can and do provide some of the same 
services as smaller companies, but SBA believes that raising the size 
standard to include much larger firms would not be equitable for those 
small businesses that the Agency seeks to support and protect.
    Based on its analyses of relevant industry and Federal contracting 
data, SBA has determined that the proposed $10 million size standard is 
appropriate for NAICS 811213. Moreover, a size standard higher than the 
$10 million level would create substantial competitive disadvantages 
for small businesses below that level in bidding for Federal 
procurement opportunities. Therefore, SBA is adopting as final its 
proposed $10 million size standard for NAICS 811213.
    Another commenter stated that SBA should not raise size standards 
to enable Federal agencies to meet their small business contracting 
goals. However, whether Federal agencies meet their goals or not is not 
a factor SBA considers in its analysis. Once SBA has established small 
business size standards, it is the various agencies' responsibility to 
structure and monitor their contracting activities to meet their small 
business contracting goals. SBA's objective is to assure that there are 
an adequate number of small businesses to maintain suitable competition 
among them. At the same time, SBA wants to make certain that the pool 
is not too large so that there would be an inordinate number of 
apparently small businesses. The commenter stated further that a 
company with $7 million in receipts or one that has 500 employees is 
not a small business and such levels might not suggest smallness for 
many people. SBA draws the line of demarcation between small and other 
than small where it will provide adequate procurement opportunities for 
businesses below that level.
    In the proposed rule, SBA requested comments on whether 
simplification of size standards by reducing them to eight fixed levels 
was appropriate. SBA also requested comments on whether it should, as a 
policy, limit the amount of increase or decrease to a size standard, 
and whether SBA should, as a policy, establish certain minimum or 
maximum values for size standards.
    One commenter suggested that there should be only one maximum 
revenue based standard and one maximum employee based size standard, 
regardless of NAICS industry. While this would simplify size standards 
even more than what SBA had proposed, the Act, as noted above, states 
in Sec.  3(a)(3) that ``the [SBA] Administrator shall ensure that the 
size standard varies from industry to industry to the extent necessary 
to reflect the differing characteristics of the various industries and 
consider other factors deemed to be relevant by the Administrator.'' 
(15 U.S.C. 632(a)(3)). The relevant data show significant differences 
among industries within each NAICS Sector, including Sector 81, and SBA 
believes that varying the size standard by industry not only complies 
with the Act, but it also serves the best interests of small businesses 
in that Sector. Therefore, SBA does not presently plan to reduce the 
number of receipts based size standard levels below eight as detailed 
in the proposed rule.
    SBA did not receive any comments on whether it should lower the 
size standards for the 20 industries in NAICS Sector 81 for which SBA's 
analyses supported reducing the existing size standards. SBA also did 
not receive any comments on nine industries for which SBA's analyses 
supported retaining the existing size standards and on NAICS 811212 for 
which SBA had proposed retaining the current standard until it reviews 
NAICS Sector 54. Therefore, SBA is retaining the existing size 
standards for 28 of the 48 Industries in NAICS Sector 81. All comments 
to the proposed rule are available for public review at http://www.regulations.gov.

Conclusion

    Based on the analyses of relevant industry and program data and 
public comments it received on the proposed rule, SBA has decided to 
increase the small business size standards for the 18 industries in 
NAICS Sector 81 to the levels it proposed. The revised size standards 
are shown in the following table.

          Summary of Revised Size Standards in NAICS Sector 81
------------------------------------------------------------------------
                                           Current size    Revised size
                  NAICS                    standard  ($    standard  ($
                                             million)        million)
------------------------------------------------------------------------
811122--Automotive Glass Replacement                $7.0           $10.0
 Shops..................................
811213--Communication Equipment Repair               7.0            10.0
 and Maintenance........................
811219--Other Electronic and Precision               7.0            19.0
 Equipment Repair and Maintenance.......
811412--Appliance Repair and Maintenance             7.0            14.0
812191--Diet and Weight Reducing Centers             7.0            19.0
812220--Cemeteries and Crematories......             7.0            19.0
812320--Dry-cleaning and Laundry                     4.5             5.0
 Services (except Coin-Operated)........
812331--Linen Supply....................            14.0            30.0
812332--Industrial Launderers...........            14.0            35.5
812921--Photo Finishing Laboratories                 7.0            19.0
 (except One-Hour)......................
812922--One-Hour Photo Finishing........             7.0            14.0
812930--Parking Lots and Garages........             7.0            35.5
813211--Grantmaking Foundations.........             7.0            30.0
813212--Voluntary Health Organizations..             7.0            25.5
813219--Other Grant Making and Giving                7.0            35.5
 Services...............................
813311--Human Rights Organizations......             7.0            25.5

[[Page 61594]]

 
813312--Environment, Conservation and                7.0            14.0
 Wildlife Organizations.................
813920--Professional Organizations......             7.0            14.0
------------------------------------------------------------------------

    Although there were two comments opposing the proposed increases, 
SBA believes that its analyses warrants the increases, for the reasons 
it gave in the October 21, 2009 proposed rule. SBA's proposed rule 
indicated that its analysis might justify proposing reductions to size 
standards for 20 industries in this Sector. However, SBA has opted not 
to reduce the size standards for these industries for the reasons given 
in the proposed rule. Lowering small business size standards would be 
inconsistent with its ongoing effort to promote small business 
assistance under the Recovery Act.

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

Executive Order 12866

    The Office of Management and Budget (OMB) has determined that this 
final rule is a ``significant'' regulatory action for purposes of 
Executive Order 12866. Accordingly, the next section contains SBA's 
Regulatory Impact Analysis. This is not a major rule, however, under 
the Congressional Review Act, 5 U.S.C. 800.

Regulatory Impact Analysis

Is there a need for the regulatory action?
    SBA believes that the adopted adjustments to certain size standards 
in Sector 81, Other Services, better reflect the changes in economic 
characteristics of small businesses in those industries. SBA provides 
aid and assistance to small businesses through a variety of financial, 
procurement, business development and advocacy programs. To assist the 
intended beneficiaries of these programs effectively, SBA establishes 
distinct definitions to determine which businesses are deemed small 
businesses. The Small Business Act (15 U.S.C. 632(a)) delegates to 
SBA's Administrator responsibility for establishing small business 
definitions. The Act also requires that small business definitions vary 
to reflect industry differences. The supplementary information section 
of the proposed rule and this rule explained in detail SBA's 
methodology for analyzing a size standard for a particular industry.
What are the potential benefits and costs of this regulatory action?
    The most significant benefit to businesses obtaining small business 
status as a result of this rule is eligibility for Federal small 
business assistance programs, including SBA's financial assistance 
programs, economic injury disaster loans and Federal procurement 
opportunities reserved for small businesses. Federal procurement 
provides opportunities for small businesses under SBA's business 
development programs, such as 8(a) participantes, small businesses 
located in Historically Underutilized Business Zones (HUBZone), women 
owned small businesses and service disabled veteran owned small 
businesses (SDVOSB). Other Federal agencies also may use SBA size 
standards for a variety of regulatory and program purposes. Through the 
assistance of these programs, small businesses become more 
knowledgeable, stable and competitive.
    Of 18 industries in Sector 81 for which SBA has increased their 
size standards, 12 are for-profit industries and six are non-profits. 
In the 12 for-profit industries for which SBA has increased size 
standards, the Agency estimates that about 325 additional firms will 
obtain small business status and become eligible for these programs. 
That represents 0.6 percent of total firms and 5.6 percent of total 
sales in those industries. In the six non-profit industries for which 
size standards have been increased, SBA estimates that about 1,175 
additional firms, representing 4.2 percent of total firms and 16.9 
percent of total sales in those industries, will qualify as small 
organizations (a non-profit entity cannot qualify as a small business 
concern). 13 CFR 121.105 In the 20 industries (including non-profits) 
for which SBA's analyses indicated a lower size standard is 
appropriate, about 1,850 firms, representing 0.6 percent of total firms 
and 5.1 percent of total sales in those industries, might have lost 
their small business status, had SBA lowered their size standards. 
Thus, the net impact for the Sector as a whole is about 1,400 
additional firms gaining and none losing small business status under 
this final rule. This will increase the small business share of total 
industry receipts for the Sector from 59.0 percent under the current 
size standards to 63.5 percent under the revised standards.
    The benefits of increasing size standards to a more appropriate 
level will accrue to three groups: (1) Businesses that are above the 
current size standards will benefit by gaining small business status 
under the higher size standards, thereby being able to participate in 
Federal small business assistance programs; (2) growing small 
businesses that are close to exceeding the current size standards will 
be able to retain their small business status under the higher size 
standards, thereby being able to continue their participation in the 
programs; and (3) Federal agencies that award contracts under 
procurement programs that require small business status.
    More than 40 percent of total Federal contracting dollars received 
by industries in Sector 81 (excluding NAICS 811212 and those in 
Subsector 813) during fiscal years 2006-2008 were accounted for by two 
of the 18 industries for which SBA is increasing size standards in this 
final rule, namely NAICS 811213 and NAICS 811219. SBA estimates that 
additional firms gaining small business status in those two and other 
industries in Subsectors 811 and 812 under the proposed size standards 
could potentially obtain Federal contracts totaling up to between $25 
million and $30 million per year under the small business set-aside 
program, the 8(a), HUBZone, and SDVOSB Programs, or unrestricted 
procurements. The added competition for many of these procurements also 
could likely result in lower prices to the Government for procurements 
reserved for small businesses, but SBA cannot quantify this benefit.
    Under SBA's 7(a) Guaranteed Loan Program and CDC Program, SBA 
estimates that approximately 10 additional loans totaling between $4 
million and $5 million in new Federal loan guarantees will be made to 
newly defined small businesses. Because of the size of the loan 
guarantees, however, most loans are made to small businesses

[[Page 61595]]

well below the size standard. SBA has also applied its CDC alternative 
size standard to its 7(a) Business Loan Program, and more capital is 
therefore available to small businesses. Thus, increasing the size 
standards will likely result in an increase in small business 
guaranteed loans to small businesses in these industries, but it would 
be impractical to try to estimate the extent of their number and the 
total amount loaned.
    The newly defined small businesses will also benefit from SBA's 
Economic Injury Disaster Loan (EIDL) Program. Since this program is 
contingent on the occurrence and severity of disasters, no meaningful 
estimate of benefits can be projected.
    To the extent that 325 additional firms in Subsectors 811 and 812 
that become small under the revised size standards could become active 
in Federal procurement programs, this may entail some additional 
administrative costs to the Federal Government. Additional firms will 
likely participate in Federal procurement opportunities reserved for 
small businesses, seek SBA guaranteed loans and SBA guaranteed surety 
bonds in connection with Federal projects, register in the Central 
Contractor Registration, be listed in the Dynamic Small Business Search 
databases, and seek certification as 8(a) or HUBZone firms. Among 
businesses in this group seeking SBA assistance, there could be 
additional costs associated with compliance and verification of small 
business status and protests of businesses that claim small business 
standing. These additional costs are likely to be minimal because 
mechanisms are already in place to handle these administrative 
requirements.
    The costs to the Federal Government may be higher on some Federal 
contracts. With a greater number of businesses defined as small, 
Federal agencies may choose to set aside more contracts for competition 
among small businesses rather than using full and open competition. The 
movement from unrestricted to set-aside contracting will likely result 
in competition among fewer bidders. In addition, higher costs may 
result when additional full and open contracts are awarded to HUBZone 
businesses because of a price evaluation preference. The additional 
costs associated with fewer bidders, however, will likely be minor 
since, as a matter of law, procurements may be set aside for small 
businesses or reserved for the 8(a) or HUBZone Programs only if awards 
are expected to be made at fair and reasonable prices.
    The adopted size standards may have some distributional effects 
among large and small businesses. Although the actual outcome of the 
gains and losses among small and large businesses cannot be estimated 
with certainty, several likely impacts can be identified. There will 
likely be a transfer of some Federal contracts from large businesses to 
small businesses. Large businesses may have fewer Federal contract 
opportunities as Federal agencies decide to set aside more Federal 
contracts for small businesses. Also, some Federal contracts may be 
awarded to HUBZone concerns instead of large businesses since HUBZone 
concerns may be eligible for an evaluation adjustment for contracts 
competed on a full and open basis. Similarly, currently defined small 
businesses may obtain fewer Federal contracts due to the increased 
competition from more businesses defined as small under the revised 
size standards. This transfer may be offset by a greater number of 
Federal procurements set aside for all small businesses. The number of 
newly defined and expanding small businesses that are willing and able 
to sell to the Federal Government will limit the potential transfer of 
contracts away from large and currently defined small businesses. The 
potential distributional impacts of these transfers may not be 
estimated with any degree of precision because the currently available 
data on the size of business receiving a Federal contract are limited 
to identifying small or other than small businesses, without regard to 
the exact size of the business.
    The revisions to the existing size standards for Other Services 
industries are consistent with SBA's statutory mandate to assist small 
business. This regulatory action promotes the Administration's 
objectives. One of SBA's goals in support of the Administration's 
objectives is to help individual small businesses succeed through fair 
and equitable access to capital and credit, Government contracts, and 
management and technical assistance. Reviewing and modifying size 
standards, when appropriate, ensures that intended beneficiaries have 
access to small business programs designed to assist them.
    Executive Order 12988: For purposes of Executive Order 12988, Civil 
Justice Reform, SBA has determined that this rule is crafted, to the 
extent practicable, in accordance with the standards set forth in 
Sec. Sec.  3(a) and 3(b)(2), to minimize litigation, eliminate 
ambiguity and reduce burden.
    Executive Order 13132: For purposes of Executive Order 13132, SBA 
has determined that this rule has no federalism implications warranting 
preparation of a federalism assessment.
    Paperwork Reduction Act: This interim final rule does not impose 
any additional reporting or recordkeeping requirements under the 
Paperwork Reduction Act, 44 USC Chapter 35.

Final Regulatory Flexibility Analysis

    Under the Regulatory Flexibility Act (RFA), this rule may have a 
significant impact on a substantial number of small entities in NAICS 
Sector 81, Other Services. As described above, this rule may affect 
small entities seeking Federal contracts, SBA (7a) and 504 Guaranteed 
Loan Programs, SBA Economic Injury Disaster Loans, and other Federal 
small business programs.
    Immediately below, SBA sets forth a final regulatory flexibility 
analysis of this final rule addressing the following questions: (1) 
What is the need for and objective of the rule? (2) what is SBA's 
description and estimate of the number of small entities to which the 
rule will apply? (3) what are the projected reporting, record keeping, 
and other compliance requirements of the rule? (4) what are the 
relevant Federal rules which may duplicate, overlap or conflict with 
the rule? and (5) what alternatives will allow the Agency to accomplish 
its regulatory objectives while minimizing the impact on small 
entities?
(1) What is the need for and objective of the rule?
    Most of SBA's size standards for the Other Services industries have 
not been reviewed since the early 1980s, and many have not been changed 
since the 1960s, except for periodic adjustments for inflation. 
Technology, productivity growth, international competition, mergers and 
acquisitions, and updated industry definitions may have changed the 
structure of many industries. Such changes can be sufficient to support 
a revision to size standards for some industries. Based on an analysis 
of the latest data available to the Agency, SBA believes that the 
revised standards in this final rule more appropriately reflect the 
size of businesses in those industries that need Federal assistance.
(2) What is SBA's description and estimate of the number of small 
entities to which the rule will apply?
    In this final rule, SBA estimates that approximately 1,400 
additional firms will become small because of increases in size 
standards in the 18 industries within Sector 81. That represents about 
1.8 percent of approximately 75,500 total firms in those industries. 
This will

[[Page 61596]]

result in an increase in the small business share of total industry 
receipts for that Sector from 59.0 percent under the current size 
standards to 63.5 percent under the revised standards.
(3) What are the projected reporting, recordkeeping, and other 
compliance requirements of the rule and an estimate of the classes of 
small entities which will be subject to the requirements?
    A new size standard does not impose any additional reporting or 
recordkeeping requirements on small entities. However, qualifying for 
Federal procurement and a number of other programs requires that 
entities register in the Central Contractor Registration (CCR) database 
and certify at least annually that they are small in the Online 
Representations and Certifications Application (ORCA). Therefore, 
businesses opting to participate in those programs must comply with CCR 
and ORCA requirements. There are no costs associated with either CCR 
registration or ORCA certification. Revising size standards alters the 
access to SBA programs that assist small businesses, but does not 
impose a regulatory burden as they neither regulate nor control 
business behavior.
(4) What are the relevant Federal rules which may duplicate, overlap or 
conflict with the rule?
    This rule overlaps with other Federal rules that use SBA's size 
standards to define a small business. Under Sec.  3(a)(2)(C) of the 
Small Business Act, 15 U.S.C. 632(a)(2)(C), Federal agencies must use 
SBA's size standards to define a small business, unless specifically 
authorized by statute. In 1995, SBA published in the Federal Register a 
list of statutory and regulatory size standards that identified the 
application of SBA's size standards as well as other size standards 
used by Federal agencies (60 FR 57988, dated November 24, 1995). SBA is 
not aware of any Federal rule that would duplicate or conflict with 
establishing size standards.
    However, the Small Business Act and SBA's regulations allow Federal 
agencies to develop different size standards if they believe that SBA's 
size standards are not appropriate for their programs, with the 
approval of SBA's Administrator (13 CFR 121.903). The Regulatory 
Flexibility Act authorizes an Agency to establish an alternative small 
business definition, after consultation with the Office of Advocacy of 
the U.S. Small Business Administration (5 U.S.C. 601(3)). Thus, there 
may be instances where this rule conflicts with other rules.
(5) What alternatives will allow the Agency to accomplish its 
regulatory objectives while minimizing the impact on small entities?
    By law, SBA is required to develop numerical size standards for 
establishing eligibility for Federal small business assistance 
programs. Other than varying size standards by industry and changing 
the size measures, no alternative exists to the systems of numerical 
size standards.

List of Subjects in 13 CFR Part 121

    Administrative practice and procedure, Government procurement, 
Government property, Grant programs--business, Individuals with 
disabilities, Loan programs--business, Reporting and recordkeeping 
requirements, Small businesses.

0
For reasons set forth in the preamble, SBA amends 13 CFR part 121 as 
follows:

PART 121--SMALL BUSINESS SIZE REGULATIONS

Subpart A--Size Eligibility Provisions and Standards

0
1. The authority citation for part 121 continues to read as follows:

    Authority: 15 U.S.C. 632, 634(b)(6), 636(b), 637(a), 644, 
657(a), 657(f), and 662(5); and Pub. L. 105-135, Sec. 401, et seq., 
111 Stat, 2592.


0
2. In Sec.  121.201, in the table, revise the entries for ``811122'', 
``811213'', ``811219'', ``811412'', ``812191'', ``812220'', ``812320'', 
``812331'', ``812332'', ``812921'', ``812922'', ``812930'', ``813211'', 
``813212'', ``813219'', ``813311'', ``813312'', and ``813920'' to read 
as follows:


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

* * * * *

             Small Business Size Standards by NAICS Industry
------------------------------------------------------------------------
                                          Size standards  Size standards
   NAICS codes      NAICS U.S. industry   in millions of   in number of
                           title              dollars        employees
------------------------------------------------------------------------
 
                              * * * * * * *
811122..........  Automotive Glass                 $10.0  ..............
                   Replacement Shops.
 
                              * * * * * * *
811213..........  Communication                     10.0  ..............
                   Equipment Repair and
                   Maintenance.
811219..........  Other Electronic and              19.0  ..............
                   Precision Equipment
                   Repair and
                   Maintenance.
 
                              * * * * * * *
811412..........  Appliance Repair and              14.0  ..............
                   Maintenance.
 
                              * * * * * * *
812191..........  Diet and Weight                   19.0  ..............
                   Reducing Centers.
 
                              * * * * * * *
812220..........  Cemeteries and                    19.0  ..............
                   Crematories.
 
                              * * * * * * *
812320..........  Dry-cleaning and                   5.0  ..............
                   Laundry Services
                   (except Coin-
                   Operated).
812331..........  Linen Supply..........            30.0  ..............
812332..........  Industrial Launderers.            35.5  ..............
 
                              * * * * * * *
812921..........  Photo Finishing                   19.0  ..............
                   Laboratories (except
                   One-Hour).

[[Page 61597]]

 
812922..........  One-Hour Photo                   $14.0  ..............
                   Finishing.
812930..........  Parking Lots and                  35.5  ..............
                   Garages.
 
                              * * * * * * *
813211..........  Grantmaking                       30.0  ..............
                   Foundations.
813212..........  Voluntary Health                  25.5  ..............
                   Organizations.
813219..........  Other Grant Making and            35.5  ..............
                   Giving Services.
813311..........  Human Rights                      25.5  ..............
                   Organizations.
813312..........  Environment,                      14.0  ..............
                   Conservation and
                   Wildlife
                   Organizations.
 
                              * * * * * * *
813920..........  Professional                      14.0  ..............
                   Organizations.
 
                              * * * * * * *
------------------------------------------------------------------------


    Dated: September 10, 2010.
Marie C. Johns,
Deputy Administrator.
[FR Doc. 2010-24860 Filed 10-5-10; 8:45 am]
BILLING CODE 8025-01-P


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