53940 Federal Register / Vol. 74, No. 202 / Wednesday, October 21, 2009 / Proposed Rules 

* * * * * 

Dated: October 9, 2009. 

Karen G. Mills, 

Administrator. 

[FR Doc. E9–25193 Filed 10–20–09; 8:45 am] 

BILLING CODE 8025–01–P 

SMALL BUSINESS ADMINISTRATION 

13 CFR Part 121 

Small Business Size Standards: Size 

Standards Methodology 

AGENCY: U.S. Small Business 

Administration. 

ACTION: Notice of Availability of White 

Paper on Size Standards Methodology. 

SUMMARY: The U.S. Small Business 

Administration (SBA) is advising the 

public that it is making available a 

White Paper putting forth and 

explaining how it establishes, reviews 

and modifies (when appropriate) small 

business size standards. The document, 

entitled ‘‘Size Standards Methodology,’’ 

is available on SBA’s Web site where 

any interested party can review and/or 

download it. Elsewhere in this issue of 

the Federal Register SBA has published 

three proposed rules that would, if 

adopted, modify a number of size 

standards in three North American 

Industry Classification System (NAICS) 

Sectors, namely: Sector 44–45, Retail 

Trade; Sector 72, Accommodation and 

Food Services; and Sector 81, Other 

Services. SBA has applied ‘‘Size 

Standards Methodology’’ to those three 

proposed rules and will apply it to 

future regulatory actions that relate to 

establishing, reviewing and modifying 

size standards. The Agency welcomes 

comments on ‘‘Size Standards 

Methodology’’ and on the three 

proposed rules elsewhere in this issue 

of the Federal Register. ‘‘Size Standards 

Methodology,’’ is available 

electronically from the SBA’s Web site 

at: http://www.sba.gov/size. 

ADDRESSES: The size standards 

methodology white paper is available 

electronically on SBA’s Web site at 

http://www.sba.gov/size. You may 

submit comments on ‘‘Size Standards 

Methodology,’’ identified by Docket 

number SBA–2009–0008 by one of the 

following methods: (1) Federal 

eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments; 

or (2) Mail/Hand Delivery/Courier: U.S. 

Small Business Administration, Khem 

R. Sharma, Chief, Size Standards 

Division, 409 Third Street, SW., Mail 

Code 6530, Washington, DC 20416. 

SBA will post all comments on 

www.regulations.gov. If you wish to 

submit confidential business 

information (CBI) as defined in the User 

Notice at www.regulations.gov, please 

submit the information to Khem R. 

Sharma, 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 the information and make the 

final determination of whether it will 

publish the information or not. 

FOR FURTHER INFORMATION CONTACT: Carl 

J. Jordan, Program Analyst, Size 

Standards Division, (202) 205–6618 or 

sizestandards@sba.gov. 

SUPPLEMENTARY INFORMATION: To 

determine eligibility for Federal small 

business assistance programs, SBA 

establishes small business 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 subindustry 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 the changes in the Federal 

contracting marketplace. Therefore, SBA 

has undertaken a complete review of all 

small business size standards. The last 

overall review of size standards 

occurred during the late 1970s to 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 has, in the past, included its 

methodology for reviewing size 

standards in its proposed and final rules 

that related to the industry or industries 

under examination. In the course of its 

comprehensive review of all small 

business size standards SBA has now 

developed and formalized its small 

business size standards processes. ‘‘Size 

Standards Methodology’’ describes how 

SBA establishes, evaluates and adjusts 

its small business size standards 

pursuant to the Small Business Act 

(Act) and related legislative guidelines. 

Under the Act (Pub. L. 85–236, as 

amended), the SBA Administrator 

(Administrator) has authority to 

establish small business size standards 

for Federal government programs. 

Congress left to administrative 

discretion precisely how the 

Administrator should establish small 

business size standards or what they 

should be. ‘‘Size Standards 

Methodology’’ provides a brief review of 

the legal authority, early legislative 

history and regulatory history of small 

business size standards, a detailed 

description of the size standards 

methodology, and concludes with a 

discussion of numerous policy issues 

regarding the objectives and direction of 

size standards. An appendix at the end 

of the document summarizes the 

detailed analytical steps involved in the 

evaluation of size standard for an 

industry. 

In establishing size standards, the Act 

and its legislative history highlight two 

considerations. First, size standards 

should vary to account for differences 

among industries. Second, the policies 

of the Agency should assist small 

businesses as a means of encouraging 

and strengthening their competitiveness 

in the economy. These two 

considerations form the basis for the 

SBA current methodology for 

establishing small business size 

standards. 

SBA examines the structural 

characteristics of an industry as a way 

to assess industry differences and the 

overall degree of competitiveness of an 

industry and of firms within the 

industry. ‘‘Size Standards 

Methodology’’ describes more fully how 

SBA examines industry structure and 

analyzes five primary factors—average 

firm size, degree of competition within 

an industry, start up costs and entry 

barriers, distribution of firms by size, 

and small business share in Federal 

contracts. SBA also considers other 

secondary factors as they relate to the 

industries and the interests of small 

businesses, including technological 


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Federal Register / Vol. 74, No. 202 / Wednesday, October 21, 2009 / Proposed Rules 53941 

change, competition among industries, 

industry growth trends, and impacts on 

SBA programs. 

SBA conducts a statistical analysis of 

data on the primary factors, and 

secondary factors as appropriate, to 

establish a size standard for a specific 

industry. As a starting point, SBA 

presumes $7.0 million as an appropriate 

size standard for the services, retail 

trade, construction, and other industries 

with receipts based size standards; 500 

employees for the manufacturing, 

mining and other industries with 

employee based size standards; and 100 

employees for the wholesale trade 

industries. These three levels, referred 

to as ‘‘anchor size standards,’’ are not 

minimum size standards, but rather 

benchmarks or starting points. To the 

extent an industry displays ‘‘differing 

industry characteristics,’’ a size 

standard higher, or in some cases lower, 

than an anchor size standard is 

supportable. ‘‘Size Standards 

Methodology’’ includes an extensive 

discussion of the statistical analyses 

involved in size standards 

determination. 

SBA welcomes comments from the 

public on a number of issues. SBA is 

aware that different choices among size 

standards can involve complex tradeoffs 

among relevant variables; SBA invites 

comments on how to identify and weigh 

those variables. Suggestions are invited 

on alternative methodologies for 

determining small businesses; on how 

these size standards affect competition 

in general and within the specific 

industry; on alternative or additional 

factors that SBA should consider; on 

whether SBA’s approach to small 

business size standards makes sense in 

the current economic environment; on 

whether SBA’s using anchor size 

standards is appropriate in the current 

economy; on whether there are gaps in 

SBA’s methodology because of the lack 

of comprehensive data; and on 

alternative datasets SBA should 

consider for a specific sector. 

The concluding section of ‘‘Size 

Standards Methodology’’ raises a 

number of policy questions that SBA 

has to address in developing a robust 

methodology for establishing, evaluating 

and revising its small business size 

standards. Examples include how high 

of a size standard is too high? Should 

there be a single basis for all size 

standards (i.e., employees or annual 

receipts)? Should there be a fixed 

number of ‘‘bands’’ of size standards or 

separate standard for each industry? 

‘‘Size Standards Methodology’’ includes 

several other issues, including some that 

tend to be on-going questions. 

SBA encourages the public to review 

‘‘Size Standards Methodology’’ and to 

comment on it either in whole or in 

part. 

Dated: October 9, 2009. 

Karen G. Mills, 

Administrator. 

[FR Doc. E9–25196 Filed 10–20–09; 8:45 am] 

BILLING CODE 8025–01–P 

SMALL BUSINESS ADMINISTRATION 

13 CFR Part 121 

RIN 3245–AF70 

Small Business Size Standards: Other 

Services Industries 

AGENCY: U.S. Small Business 

Administration. 

ACTION: Proposed rule. 

SUMMARY: The U.S. Small Business 

Administration (SBA) proposes to 

increase the small business size 

standards for 18 industries in North 

American Industry Classification 

System (NAICS) Sector 81, Other 

Services, and retain 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 each 

industry in Sector 81 to determine 

whether the existing size standards 

should be retained or revised. This 

proposed rule is one of a series of 

proposals that will examine industries 

grouped by an NAICS Sector. As part of 

this series of proposed rules SBA is 

publishing concurrently in this issue of 

the Federal Register a proposed rule to 

modify small business size standards in 

Sector 44–45, Retail Trade and, in 

Sector 72, Accommodation and Food 

Services. SBA has established its ‘‘Size 

Standards Methodology’’ and published 

elsewhere in this issue of the Federal 

Register a notice of its availability on 

SBA’s Web site at http://www.sba.gov/ 

size. SBA has applied ‘‘Size Standards 

Methodology’’ to this proposed rule. 

DATES: SBA must receive comments to 

this proposed rule on or before 

December 21, 2009. 

ADDRESSES: You may submit comments, 

identified by RIN 3245–AF70 by one of 

the following methods: (1) Federal 

eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments; 

or (2) Mail/Hand Delivery/Courier: 

Khem R. Sharma, Chief, Size Standards 

Division, 409 Third Street, SW., Mail 

Code 6530, Washington, DC 20416. 

SBA will post all comments on 

www.regulations.gov. If you wish to 

submit confidential business 

information (CBI) as defined in the User 

Notice at www.regulations.gov, please 

submit the information to U.S. Small 

Business Administration, Khem R. 

Sharma, Chief, Size Standards Division, 

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 the information and make the 

final determination of whether it will 

publish the information or not. 

FOR FURTHER INFORMATION CONTACT: Carl 

J. Jordan, Program Analyst, Size 

Standards Division, (202) 205–6618 or 

sizestandards@sba.gov. 

SUPPLEMENTARY INFORMATION: To 

determine eligibility for Federal small 

business assistance programs, SBA 

establishes small business definitions 

(referred to as size standards) for private 

sector industries in the U.S. 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 the changes in the Federal 

contracting marketplace. The last 

overall review of size standards 

occurred during the late 1970s to 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). 


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