53924 Federal Register / Vol. 74, No. 202 / Wednesday, October 21, 2009 / Proposed Rules 

SMALL BUSINESS SIZE STANDARDS BY NAICS INDUSTRY

NAICS codes NAICS U.S. industry title 

Size standards 

in millions of 

dollars 

Size standards 

in number of 

employees 

* * * * * * * 

Sector 72—Accommodation and Food Services 

Subsector 721—Accommodation 

721110 ............. Hotels (except Casino Hotels) and Motels ............................................................................... $30.0 ........................

721120 ............. Casino Hotels ............................................................................................................................ 30.0 ........................

721191 ............. Bed-and-Breakfast Inns ............................................................................................................ 7.0 ........................

721199 ............. All Other Traveler Accommodation ........................................................................................... 7.0 ........................

721211 ............. RV (Recreational Vehicle) Parks and Campgrounds ............................................................... 7.0 ........................

721214 ............. Recreational and Vacation Camps (except Campgrounds) ..................................................... 7.0 ........................

721310 ............. Rooming and Boarding Houses ................................................................................................ 7.0 ........................

Subsector 722—Food Services and Drinking Places 

722110 ............. Full-Service Restaurants ........................................................................................................... 7.0 ........................

722211 ............. Limited-Service Restaurants ..................................................................................................... 10.0 ........................

722212 ............. Cafeterias .................................................................................................................................. 25.5 ........................

722213 ............. Snack and Nonalcoholic Beverage Bars .................................................................................. 7.0 ........................

722310 ............. Food Service Contractors ......................................................................................................... 35.5 ........................

722320 ............. Caterers ..................................................................................................................................... 7.0 ........................

722330 ............. Mobile Food Services ............................................................................................................... 7.0 ........................

722410 ............. Drinking Places (Alcoholic Beverages) ..................................................................................... 7.0 ........................

* * * * * 

Dated: October 9, 2009. 

Karen G. Mills, 

Administrator. 

[FR Doc. E9–25204 Filed 10–20–09; 8:45 am] 

BILLING CODE 8025–01–P 

SMALL BUSINESS ADMINISTRATION 

13 CFR Part 121 

RIN: 3245–AF69 

Small Business Size Standards: Retail 

Trade 

AGENCY: U.S. Small Business 

Administration. 

ACTION: Proposed Rule. 

SUMMARY: The U.S. Small Business 

Administration (SBA) proposes to 

increase small business size standards 

for 48 industries in North American 

Industry Classification System (NAICS) 

Sector 44–45, Retail Trade, and retain 

the current standards for the remaining 

28 industries in the Sector. As part of its 

ongoing initiative to review all size 

standards, SBA has evaluated each 

industry in Sector 44–45 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 72, Accommodation and Food 

Services, and in Sector 81, Other 

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–AF69 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 

http://www.regulations.gov. If you wish 

to submit confidential business 

information (CBI) as defined in the User 

Notice at http://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 e-mail 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 


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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). 

The evaluation of the size standards 

in the Retail Trade is also necessary to 

account for changes in the industry 

classification. The development of 

NAICS in 1997 included a significant 

change in the definition of industries in 

the Retail and Wholesale Trade Sectors. 

Many businesses engaged in retail trade 

activities that had been classified in the 

Wholesale Trade Sector under the 

earlier Standard Industrial Classification 

(SIC) System were reclassified into the 

Retail Trade Sector under NAICS (see 

NAICS Clarification Memorandum No. 

1, ‘‘NAICS Sector 42—Wholesale Trade 

Scope and Implementation Guidelines 

for U.S. Statistical Agencies’’). 

Furthermore, the NAICS codes used in 

the 2002 Economic Census included a 

different set of businesses in the Retail 

Trade Sector than that in the 1997 

Economic Census. For example, the 

2002 NAICS included 11 new industries 

in Retail Trade. These changes in the 

industry classification have led SBA to 

evaluate if the existing size standards 

for the Retail Trade industries are 

appropriate. Most of the Retail Trade 

size standards have not been reviewed 

since the 1980s, and many have not 

been changed since the 1960s, except 

for periodic adjustments for inflation. 

SBA recognizes that industrial 

changes 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 ensure that existing 

size standards have supportable bases 

and, where necessary, to make revisions 

to current size standards. This proposed 

rule affords the public an opportunity to 

review and comment on the data and 

methodology SBA uses to evaluate and 

revise a size standard. 

Rather than review all size standards 

at one time, SBA believes that a more 

manageable approach would be to 

examine a group of related industries 

within an NAICS Sector in phases. 

Except for manufacturing, an NAICS 

Sector generally consists of 25 to 75 

industries. Once a review of size 

standards for industries within an 

NAICS Sector is completed, SBA will 

issue a proposed rule for those 

industries in which the analysis of 

industry data supports a change to the 

existing size standards. SBA expects to 

complete a review of all NAICS Sectors 

in two years. 

Below is a discussion of SBA’s size 

standards methodology, including 

analyses of industry structure, Federal 

procurement trends and other factors for 

industries within Sector 44–45, Retail 

Trade, and the impact of the proposed 

revisions to size standards on Federal 

small businesses assistance. 

Size Standards Methodology 

SBA has recently developed a ‘‘Size 

Standards Methodology’’ that it uses for 

developing and modifying size 

standards when necessary. SBA has 

published the document which is 

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

SBA does not apply all features of its 

‘‘Size Standards Methodology’’ to all 

cases because not all are appropriate. 

However, SBA does make it available in 

its entirety for parties with an interest 

in SBA’s overall approach to evaluating, 

establishing and modifying small 

business size standards. SBA always 

explains its analysis in the proposed 

and final rules that relate to size 

standards for specific industries. The 

following discussion is of SBA’s size 

standard analysis applied to industries 

in Sector 44–45, Retail Trade. 

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. 

Congress granted SBA’s Administrator 

discretion to establish detailed small 

business size standards (15 U.S.C. 

632(a)(2)). 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 characteristics among 

various industries. Accordingly, the 

economic structure of an industry serves 

as the underlying basis for developing 

and modifying small business size 

standards. By examining data on 

economic characteristics defining the 

industry structure (as described below), 

the small business segment of an 

industry is identified. In addition to the 

industry structure, SBA also takes into 

consideration its program objectives and 

whether a size standard successfully 

excludes businesses that are dominant 

in the industry. Discussed below is 

SBA’s analysis of the economic 

characteristics of each industry in 

Sector 44–45, Retail Trade, the impact 

of proposed size standards on SBA 

programs, and the evaluation of whether 

a revised size standard would exclude 

dominant firms in the industry from 

being considered as small. 

Industry Analysis 

For the current comprehensive size 

review, SBA has established three 

‘‘base’’ or ‘‘anchor’’ size standards that 

apply to most industries—$7.0 million 

in average annual receipts for industries 

that have receipts based size standards, 

500 employees for manufacturing and 

other industries that have employee 

based size standards (except for 

Wholesale Trade), and 100 employees 

for industries in the Wholesale Trade 

Sector. SBA established 500 employees 

as the anchor size standard for the 

manufacturing industries at SBA’s 

inception in 1953 and shortly thereafter 

established a receipts based anchor size 

standard of $1 million in average annual 

receipts for the nonmanufacturing 

industries. The receipts based anchor 

size standard has been adjusted 

periodically for inflation. The inflation 

adjustment over the years has increased 

it to $7.0 million today. Since 1986, all 

industries in the Wholesale Trade 

Sector have had the 100-employee size 

standard for non-procurement SBA 

programs. The size standard for a nonmanufacturer in Federal procurement is 

500 employees. A procuring agency 

must classify a procurement for supplies 

with a manufacturing NAICS code, not 

a wholesale or retail NAICS code. 13 

CFR 121.402(b). 

These long standing anchor size 

standards have gained legitimacy 

through practice and general public 

acceptance. An anchor size standard is 

neither a minimum nor a maximum size 

standard. It is a common size standard 

for a large number of industries that 

have similar economic characteristics 

and serves as a reference point in 

evaluating size standards for individual 

industries. SBA uses the anchor in lieu 

of trying to establish precise small 

business size standards for each 

industry. Otherwise, theoretically, that 

could require that the number of size 

standards be as high as the number of 

industries for which SBA establishes 

size standards. SBA presumes an anchor 

size standard is appropriate for a 

particular industry unless that industry 

displays significantly different 

economic characteristics, as compared 


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to the characteristics of industries with 

the anchor size standard, thereby 

suggesting a need for revision to an 

existing size standard. 

When evaluating a size standard, the 

economic characteristics of a specific 

industry under review are compared to 

the average characteristics of industries 

with one of the three anchor size 

standards (referred to as ‘‘anchor 

comparison group’’) to assess industry 

structure and to determine whether the 

industry displays significant differences 

relative to the industries in the anchor 

size standard group. If the 

characteristics of a specific industry 

under review are similar to the average 

characteristics of the anchor comparison 

group, the anchor size standard would 

be considered appropriate for that 

industry. 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 anchor comparison 

group, or (2) other industry 

considerations strongly suggest that the 

anchor size standard would be an 

unreasonably high size standard for the 

industry. 

If the specific industry’s 

characteristics are significantly higher 

than those of the anchor comparison 

group, a size standard higher than the 

anchor size standard may be considered 

appropriate. The larger the differences 

are between the characteristics of the 

industry under review and those in the 

anchor comparison group, the larger 

will be the difference between the 

appropriate industry size standard and 

the anchor size standard. To determine 

the level of a size standard above the 

anchor size standard, the characteristics 

of a second comparison group are 

analyzed. For industries with receipts 

based size standards, SBA has 

developed a second comparison group 

consisting of industries with the highest 

levels of receipts based size standards. 

The size standards for this group of 

industries range from $23 million to 

$35.5 million in average receipts, with 

the weighted average size standard for 

the group equaling $29 million. SBA 

refers to this comparison group as the 

‘‘higher level receipts based size 

standard group.’’ 

The primary factors that SBA 

evaluates in analyzing the structural 

characteristics of an industry include 

average firm size, startup costs and 

entry barriers, industry competition, 

and distribution of firms by size (13 CFR 

121.102(a) and (b)). SBA also evaluates 

the possible impact of both existing and 

revised size standards on Federal 

contracting assistance to small 

businesses as an additional primary 

factor. SBA generally considers these 

five factors as the most important ones 

for establishing or revising a size 

standard for an industry. However, SBA 

will also consider and evaluate other 

information that it believes relevant to 

the decision on a size standard for a 

particular industry (such as 

technological changes, growth trends, 

SBA financial assistance and other 

program factors, etc.). Public comments 

on a proposed size standard rule also 

provide important additional 

information. SBA thoroughly reviews all 

public comments before making a final 

decision on its proposed size standard. 

Below is a brief description of each of 

the five primary evaluation factors. A 

more detailed description of this 

analysis is provided in ‘‘SBA Size 

Standards Methodology’’ paper which is 

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

1. Average firm size. SBA computes 

two measures of average firm size: 

simple average firm size and weighted 

average firm size. For industries with 

receipts based standards (including 

Retail Trade industries), the simple 

average firm size is calculated as total 

receipts of an industry divided by the 

total number of firms in that industry. 

The weighted average firm size is 

computed as the sum of weighted 

simple average firm size in different 

receipts size classes where weights are 

the shares of total industry receipts for 

respective size classes. The simple 

average firm size weighs all firms within 

an industry equally regardless of their 

size. The weighted average overcomes 

that limitation by giving more weights 

to larger firms. 

If the average firm size of an industry 

under review is significantly higher 

than the average firm size of industries 

in the anchor comparison industry 

group, this would generally support 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 

anchor comparison industry group, it 

would be a basis to adopt the anchor 

size standard or, in rare cases, a 

standard lower than the anchor. 

2. Startup costs. Startup costs reflect 

a firm’s initial size in an industry. New 

entrants to an industry must have 

sufficient capital to start and maintain a 

viable business. If firms entering a 

particular industry have greater capital 

requirements than firms do in industries 

in the anchor comparison group, this 

will form a basis for establishing a size 

standard higher than the anchor 

standard. In lieu of data on actual 

startup costs, SBA uses average assets 

size as a proxy measure to assess the 

levels of capital requirements for new 

entrants to an industry. 

SBA calculates the average assets size 

within a particular industry by applying 

the sales to total assets ratios from the 

Risk Management Association’s Annual 

Statement Studies, 2006–2008 to the 

average receipts size of firms in that 

industry. An industry with a 

significantly higher level of average 

assets size than that of the anchor 

comparison group is likely to have 

higher startup costs, which would 

support a size standard higher than the 

anchor size standard. Conversely, if the 

industry has a significantly smaller 

average assets size compared to the 

anchor comparison group, the anchor 

size standard, or in rare cases one lower 

than the anchor, would be considered 

appropriate. 

3. Industry competition. Industry 

competition is generally assessed by 

measuring the share of total industry 

receipts obtained by firms that are 

among the largest in an industry. In this 

proposed rule, SBA evaluates the share 

of industry receipts generated by the 

four largest firms in the industry. This 

is referred to as the ‘‘four-firm 

concentration ratio.’’ SBA then 

compares the four-firm concentration 

ratio for an industry under review to the 

average four-firm concentration ratio for 

industries in the anchor comparison 

group. If a significant share of economic 

activity within the industry is 

concentrated among a few relatively 

large companies, SBA would establish a 

size standard relatively higher than the 

anchor size standard. SBA would not 

consider the four-firm concentration 

ratio as an important factor in assessing 

a size standard if its value for an 

industry under review is less than 40 

percent. For industries in which the 

four largest firms account for 40 percent 

or more of an industry’s total receipts, 

SBA examines the average size of the 

four largest firms in determining a size 

standard. 

4. Distribution of firms by size. SBA 

examines the shares of industry total 

receipts accounted for by firms of 

different receipts and employment size 

classes in an industry. This is an 

additional factor SBA evaluates in 

assessing competition within an 

industry. If the preponderance of an 

industry’s economic activity is 

attributable to smaller firms, this would 

indicate that small businesses are 

competitive in that industry and 

supports adopting the anchor size 

standard. A size standard higher than 

the anchor size standard would be 

supported for an industry in which the 

distribution of firms indicates that most 


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of the economic activity is concentrated 

among the larger firms. 

Concentration among firms is a 

measure of inequality of distribution. To 

evaluate the degree of inequality of 

distribution within an industry, SBA 

computes the Gini coefficient by 

constructing the Lorenz curve. The Gini 

coefficient values vary between zero and 

one. If receipts are distributed perfectly 

equally among all the firms in an 

industry, the value of the Gini 

coefficient would equal to zero. If an 

industry’s total receipts are attributed to 

a single firm, the Gini coefficient would 

equal to one. 

SBA compares the degree of 

inequality of distribution for an industry 

under review with that for industries in 

the anchor comparison group. If an 

industry shows a higher degree of 

inequality of distribution (i.e., higher 

Gini coefficient) compared to industries 

in the anchor comparison industry 

group this would, all else being equal, 

warrant a higher size standard than the 

anchor. Conversely, for industries with 

similar or more equal distribution (i.e., 

similar or lower Gini coefficient values) 

than the anchor group, the anchor 

standard, or in some cases a standard 

lower than the anchor, would be 

adopted 

5. Impact on SBA programs. SBA 

examines the possible impact a size 

standard change may have on the level 

of Federal small business assistance. 

This assessment most often focuses on 

the share of Federal contracting dollars 

awarded to small businesses in the 

industry in question. In general, if the 

share of Federal contracting dollars 

awarded to small businesses in an 

industry that receives a significant 

amount of Federal assistance is 

significantly less than the small 

business share of the industry’s total 

receipts, a justification would exist for 

considering a size standard higher than 

the existing size standard. The disparity 

between the small business Federal 

market share and industry-wide share 

may be attributed to a variety of reasons, 

such as extensive administrative and 

compliance requirements associated 

with Federal contracts, the different 

skill set required on Federal contracts as 

compared to typical commercial 

contracting work, and the size of 

contracting requirements of Federal 

customers. These, as wells as other 

factors, are likely to influence the type 

of firms within an industry that compete 

for Federal contracts and, hence, the 

firms receiving such contracts are 

expected to possess different 

characteristics than the average 

characteristics for all firms in that 

industry. By comparing the small 

business Federal contracting share with 

the industry-wide small business share, 

SBA includes in its size standards 

analysis the latest Federal contracting 

trends. This analysis may indicate a size 

standard larger than the current 

standard. 

For this proposed rule, SBA 

considered Federal procurement trends 

in the size standards analysis only if (1) 

the small business share of Federal 

contracting dollars is at least 10 

percentage points lower than the small 

business share of total industry receipts 

and (2) the amount of total Federal 

contracting averages $100 million or 

more during fiscal years 2006–2008 (the 

latest years for which complete Federal 

procurement data are available). SBA 

has selected these thresholds because 

they reflect a significant level of 

contracting in which a revision to a size 

standard may have an impact on 

expanding small business opportunities. 

Another factor that SBA evaluates is 

the impact of a proposed size standard 

on SBA’s loan programs, that is, the 

volume of SBA guaranteed loans within 

an industry and the size of firms 

obtaining those loans. This factor is 

examined to assess whether the existing 

or the proposed size standard for a 

particular industry may be restricting 

the level of financial assistance to small 

firms in that industry. If the analysis 

shows a reduction in financial 

assistance to small businesses, a higher 

size standard would be supportable. If 

small businesses have already been 

receiving significant amounts of 

financial assistance through SBA’s loan 

programs, or if the financial assistance 

has been provided mainly to businesses 

that are much smaller in size than the 

existing size standard, consideration of 

this factor for determining the size 

standard may not be necessary. 

Sources of Industry and Program Data 

The primary source of data for SBA’s 

industry analysis is a special tabulation 

of the 2002 Economic Census (see 

http://www.census.gov/econ/census02/) 

prepared by the U.S. Bureau of the 

Census (Census Bureau) for SBA. The 

special tabulation provides SBA with 

industry-specific data on the number of 

firms, number of establishments, 

number of employees, annual payroll 

and annual receipts of companies by the 

size of firm reporting the data to Census. 

That is, the data are by the size class of 

the total company; however, the data 

itself, within a particular size class, 

represents the company’s total data in 

that industry only. The special 

tabulation enables SBA to evaluate 

average firm size, the four-firm 

concentration ratio, and distribution of 

firms by receipts and employment size. 

In some cases, where Census data 

were not available due to disclosure 

prohibitions, SBA either estimated 

missing values using available relevant 

data, or examined data at a higher level 

of industry aggregation, such as at the 2- 

or 3-digit NAICS level. In some 

instances, SBA had to base its analysis 

only on those factors for which data 

were available or missing values could 

be estimated. Data sources and 

estimation procedures SBA uses in its 

size standards analysis are documented 

in detail in the ‘‘SBA Size Standards 

Methodology’’ paper, which is available 

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

Sales to total assets ratios used to 

calculate average assets size are from the 

Risk Management Association’s Annual 

Statement Studies, 2006–2008. 

To evaluate Federal contracting 

trends, SBA examined Federal contract 

award data for fiscal years 2006–2008 

from the U.S. General Service 

Administration’s Federal Procurement 

Data System—Next Generation (FPDS– 

NG). SBA’s internal data on its 

guaranteed loan programs for fiscal 

years 2006–2008 were analyzed to 

assess the impact on financial assistance 

to small businesses. 

Dominant in Field of Operation 

Section 3(a) of the Small Business Act 

(15 U.S.C. § 632(c) defines a small 

business concern as one that is (1) 

independently owned and operated, (2) 

not dominant in its field of operation, 

and (3) within a specific small business 

definition or size standard established 

by the SBA Administrator. SBA 

considers as part of its evaluation of a 

size standard whether a business 

concern at a proposed size standard 

would be considered dominant in its 

field of operation. For this, SBA 

generally examines the industry’s 

market share of firms at the proposed 

standard or other factors that may 

indicate whether a firm can exercise a 

major controlling influence on a 

national basis in which significant 

numbers of business concerns are 

engaged. If SBA’s analysis indicates that 

a proposed size standard would include 

a dominant firm, a lower size standard 

would be considered to exclude the 

dominant firm from being defined as 

small. 

Selection of Size Standards 

To simplify size standards, for the 

ongoing comprehensive size standards 

review, SBA has proposed to select a 

size standard for an industry from a 

limited number of receipts based size 

standard levels. For many years, SBA 


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has been concerned about the 

complexity of determining small 

business status caused by a large 

number of varying receipts based size 

standards (see 69 FR 13130, March 4, 

2004, and 57 FR 62515, December 31, 

1992). Currently, there are 32 different 

levels of receipts based size standards, 

ranging from $0.75 million to $35.5 

million, with many of those levels 

applying to one or just a few industries 

only. SBA believes that such a large 

number of variations with small 

variations are both unnecessary and 

difficult to justify analytically. 

Simplifying the administration of SBA’s 

size standards to a fewer number of size 

standard levels will produce more 

common size standards for businesses 

operating in multiple related industries 

and greater consistency in the size 

standards among industries that are 

similar in their economic 

characteristics. 

This proposed rule, therefore, applies 

one of eight receipts based size 

standards to each industry in Sector 44– 

45, Retail Trade. These eight ‘‘fixed’’ 

size standard levels are $5 million, $7 

million, $10 million, $14 million, $19 

million, $25.5 million, $30.0 million 

and $35.5 million. These eight receipts 

based size standard levels are 

established by taking into consideration 

the minimum, maximum, and the more 

commonly used receipts based size 

standards. Currently, the more 

commonly used receipts based size 

standards cluster around the following 

six levels—$2.5 million to $4.5 million, 

$7 million, $9.0 million to $10 million, 

$12.5 million to $14.0 million, $25.0 

million to $25.5 million, and $33.5 

million to $35.5 million. SBA has 

selected $7 million as one of eight fixed 

levels of receipts based size standards 

because this is also an anchor standard 

for receipts based standards. A lower or 

minimum receipts based size level is 

established at $5 million. Excluding 

monetary standards for agriculture and 

those based on net commissions (such 

as real estate brokers and travel agents), 

$5 million is in the close neighborhood 

of the current minimum receipts based 

standard of $4.5 million. Among the 

higher levels size clusters, $10 million, 

$14 million, $25.5 million, and $35.5 

million are selected as other four levels 

of the fixed size standards. Because of 

a large gap between two of the size 

standard intervals, SBA has established 

intermediate levels of $19 million 

between $14 million and $25.5 million, 

and $30 million between $25.5 million 

and $35.5 million. These two 

intermediate size levels reflect roughly 

similar proportional differences 

between the two successive size 

standard levels. 

In a further effort to simplify size 

standards, SBA may propose a common 

size standard for certain closely related 

group of industries. Although the size 

standard analysis may support a specific 

size standard level for each industry, 

SBA believes that establishing different 

size standards for closely related 

industries may not be appropriate. For 

example, in cases where many of the 

same businesses operate in the same 

two industries, establishing the common 

size standard would better reflect the 

industry marketplace than establishing 

separate size standards for each of those 

industries. This situation has led SBA to 

establish a common size standard for 

the information technology (IT) services 

industries (NAICS 541511, NAICS 

541112, NAICS 541513 and NAICS 

541519), even though the industry data 

might support a distinct size standard 

for each industry. Businesses engaged in 

IT related services typically perform 

activities in two or more other related 

industries. Whenever SBA proposes a 

common size standard for closely 

related industries it will provide a 

justification for that in the proposed 

rule. 

Evaluation of Industry Structure 

SBA has evaluated the structure of 

each industry in the Retail Trade Sector 

to assess the appropriateness of the 

current size standards. As described 

above, SBA compared data on the 

economic characteristics of each 

industry in that Sector to the average 

characteristics of industries in two 

comparison groups. The first 

comparison group is comprised of all 

industries with $7.0 million size 

standards—referred to as the ‘‘receipts 

based anchor comparison group.’’ 

Because the goal of SBA’s size review is 

to assess whether a specific industry’s 

size standard should be at or different 

from the 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 provide a 

meaningful assessment and comparison 

of industry characteristics. 

If the characteristics of an industry 

under review are similar to the average 

characteristics of industries in the 

anchor comparison group, the anchor 

size standard would be considered an 

appropriate standard for that industry. If 

an individual industry’s structure is 

significantly different from that of the 

anchor group, a size standard lower or 

higher than the anchor size standard 

would be selected. The level of the new 

size standard is determined based on 

the difference between the 

characteristics of the anchor comparison 

group and a second industry 

comparison group. As described above, 

the second comparison group for 

receipts based standards consists of 

industries with the highest receipts 

based size standards, ranging from $23 

million to $35.5 million, with the 

average size standard for the group 

equaling $29 million. SBA refers to this 

group of industries as the ‘‘higher level 

receipts based size standard comparison 

group.’’ Differences in industry 

structure between an industry under 

review and the industries in the two 

comparison groups are determined by 

comparing data on each of the industry 

factors, including average firm size, 

average assets size, four-firm 

concentration ratio, and the Gini 

coefficient of distribution of firms by 

size. Table 1 shows two measures of the 

average firm size (simple and weighted), 

average assets size, four-firm 

concentration ratio, average receipts of 

the four largest firms, and the Gini 

coefficient for both anchor level and 

higher level comparison groups for 

receipts based size standards. 

TABLE 1—AVERAGE CHARACTERISTICS OF RECEIPTS BASED COMPARISON GROUPS

Receipts Based Comparison Group 

Avg. Firm Size ($ million) 

Avg. Assets 

Size ($ million) 

Avg. Four-firm 

Concentration 

Ratio (%) 

Avg. Receipts 

of Four Largest Firms ($ 

million) a

Gini CoeffiSimple Aver- cient 

age 

Weighted Average 

Anchor Level ............................................ 1.19 17.64 0.71 18.7 189.9 0.599 

Higher Level ............................................. 4.77 52.27 2.05 22.3 639.4 0.725 

a To be used for industries with a four-firm concentration ratio of 40% or greater. 


pwalker on DSK8KYBLC1PROD with PROPOSALS
Federal Register / Vol. 74, No. 202 / Wednesday, October 21, 2009 / Proposed Rules 53929 

Derivation of Size Standards Based on 

Industry Factors 

For each of the industry factors shown 

in Table 1, SBA derives a separate size 

standard based on the amount of 

differences between their values for an 

industry under review and those for the 

two comparison groups. An estimated 

size standard that is supported by each 

industry factor is derived by comparing 

its value for a specific industry under 

review to the corresponding value for 

the two comparison groups. If the 

industry value for a particular factor is 

near that for the anchor comparison 

group, the $7.0 million anchor size 

standard would be considered 

appropriate for that factor. 

If an industry’s value for a factor is 

significantly above or below the anchor 

comparison group value, a size standard 

above or below the $7.0 million anchor 

size would be warranted. The level of 

the new size standard in these cases is 

derived based on the proportional 

difference between the industry value 

and the values for the two comparison 

groups. 

For example, if an industry’s simple 

average receipts size equals $3.0 

million, SBA’s analysis would supports 

a size standard of $19 million. The $3.0 

million level is 50.6 percent between 

the average firm size of $1.19 million for 

the anchor comparison group and $4.77 

million for the higher level comparison 

group (($3.00 million¥$1.19 million) ÷ 

($4.77 million¥$1.19 million) = 0.506 

or 50.6%). This proportional difference 

is applied to the difference between the 

$7.0 million anchor size standard and 

average size standard of $29 million for 

the higher level size standard group and 

then added to $7.0 million to estimate 

a size standard of $18.12 million 

([{$29.0 million¥$7.0 million} * 0.506] 

+ $7.0 million = $18.12 million). The 

final step rounds the estimated size 

standard of $18.12 million to the nearest 

fixed size standard level, in this case to 

$19 million. 

SBA applies the above method of 

calculation to derive a size standard for 

each industry factor. Detailed formulas 

involved in these calculations are 

presented in ‘‘SBA Size Standards 

Methodology’’ which is available at 

http://www.sba.gov/size. Table 2 shows 

ranges of values for each industry factor 

and the levels of size standards 

supported by those values. 

TABLE 2—VALUES OF INDUSTRY FACTORS AND SUPPORTED SIZE STANDARDS

If Simple 

avg. 

receipts size 

($ million) 

Or if 

weighted 

avg. receipts 

size 

($ million) 

Or if 

avg. assets 

size 

($ million) 

Or if 

avg. receipts 

of largest 

four firms 

($ million) 

Or if 

gini 

coefficient 

Then 

size standard 

is 

($ million) 

<1.03 ........................................................................ <16.07 <0.65 <169.4 <0.593 5.0 

1.03 to 1.43 .............................................................. 16.07 to 20.00 0.65 to 0.80 169.4 to 220.5 0.593 to 0.608 7.0 

1.44 to 2.00 .............................................................. 20.01 to 25.51 0.81 to 1.02 220.6 to 292.0 0.609 to 0.628 10.0 

2.01 to 2.74 .............................................................. 25.52 to 32.59 1.03 to 1.29 292.1 to 384.0 0.629 to 0.653 14.0 

2.75 to 3.67 .............................................................. 32.60 to 41.65 1.30 to 1.64 384.1 to 501.5 0.654 to 0.686 19.0 

3.68 to 4.57 .............................................................. 41.66 to 50.30 1.65 to 1.97 501.6 to 613.8 0.687 to 0.718 25.5 

4.58 to 5.38 .............................................................. 50.31 to 58.17 1.98 to 2.28 613.9 to 716.1 0.719 to 0.746 30.0 

> 5.38 ....................................................................... >58.17 >2.28 >716.1 >0.746 35.5 

Table 3 shows the results of analyses 

of industry data and latest Federal 

contracting trends for each industry in 

Sector 44–45, Retail Trade. It is 

important to note, however, that the 

Federal procurement of supplies must 

be classified under the appropriate 

manufacturing NAICS code. See 13 CFR 

121.402(b). However, because there 

were Federal procurements during the 

years analyzed that were classified in 

the Retail Sector, SBA is including the 

data because they affect its evaluation of 

size standards for the Retail Trade 

Sector. Each NAICS industry row in 

columns 2, 3, 4, 6, 7 and 8 shows two 

numbers. The upper number is the 

value for the industry factor shown on 

the top of the column, while the lower 

number is the size standard supported 

by that factor. For the four-firm 

concentration ratio, a size standard is 

estimated based on the average receipts 

of the top four firms if its value is 40 

percent or more. If the four-firm 

concentration ratio for an industry is 

less than 40 percent, no size standard is 

estimated for that factor and column 5 

is left blank. The value for Federal 

contracting factor in column 8 is shown 

only for industries that averaged $100 

million or more annually in Federal 

contracting dollars during fiscal years 

2006–2008. A size standard for that 

factor is derived only if the small 

business share of total Federal 

contracting dollars is 10 percentage 

points less than the small business share 

of industry’s total receipts. Otherwise 

column 8 is also left blank. Column 9 

shows the proposed or revised size 

standard for each industry in the Retail 

Trade Sector, calculated as the average 

of size standards supported by each 

industry factor and rounded to the 

nearest fixed size level. Analytical 

details involved in the averaging 

procedure are described in the SBA 

‘‘Size Standards Methodology’’ paper 

which is available at http:// 

www.sba.gov/size. For comparison, the 

current size standards for industries in 

Sector 44–45 are also shown in column 

10 of Table 3. 

TABLE 3—SIZE STANDARDS SUPPORTED BY EACH INDUSTRY FACTOR

[Millions of dollars] 

(1) NAICS 

(2) Simple 

average firm 

size 

(3) Weighted average 

firm size 

(4) Average 

assets size 

(5) Four-firm 

ratio (%) 

(6) Four-firm 

average 

size 

(7) Gini coefficient 

(8) Federal 

contract 

factor (%) 

(9) Revised 

size 

standard 

(10) Current 

size 

standard 

441110 ...................................... $27.4 $102.6 $7.6 5.6 $9,110.3 0.638 .................... $30.0 $29.0 

New Car Dealers ....................... 35.5 35.5 35.5 .................... .................... $14.0 .................... .................... ....................

441120 ...................................... 2.0 14.7 0.5 7.1 854.7 0.561 .................... 5.0 23.0 

Used Car Dealers ..................... 10.0 5.0 5.0 .................... .................... 5.0 .................... .................... ....................

441210 ...................................... 5.2 45.2 2.2 10.5 388.7 0.702 72.4 30.0 7.0 

Recreational Vehicle Dealers .... 30.0 25.5 30.0 .................... .................... 25.5 .................... .................... ....................

441221 ...................................... 3.4 10.4 1.4 2.4 97.8 0.576 .................... 14.0 7.0 


pwalker on DSK8KYBLC1PROD with PROPOSALS
53930 Federal Register / Vol. 74, No. 202 / Wednesday, October 21, 2009 / Proposed Rules 

TABLE 3—SIZE STANDARDS SUPPORTED BY EACH INDUSTRY FACTOR—Continued 

[Millions of dollars] 

(1) NAICS 

(2) Simple 

average firm 

size 

(3) Weighted average 

firm size 

(4) Average 

assets size 

(5) Four-firm 

ratio (%) 

(6) Four-firm 

average 

size 

(7) Gini coefficient 

(8) Federal 

contract 

factor (%) 

(9) Revised 

size 

standard 

(10) Current 

size 

standard 

Motorcycle, ATV, and Personal 

Watercraft Dealers ................. 19.0 5.0 19.0 .................... .................... 5.0 .................... .................... ....................

441222 ...................................... 2.6 23.3 1.4 10.1 310.7 0.624 .................... 14.0 7.0 

Boat Dealers ............................. 14.0 10.0 19.0 .................... .................... 10.0 .................... .................... ....................

441229 ...................................... 1.8 11.1 0.7 8.6 85.3 0.545 .................... 5.0 7.0 

All Other Motor Vehicle Dealers 10.0 5.0 5.0 .................... .................... 5.0 .................... .................... ....................

Except ....................................... 3.8 .................... 1.3 .................... .................... .................... .................... .................... ....................

Aircraft Dealers, Retail .............. 25.5 .................... 19.0 .................... .................... .................... .................... 25.5 10.0 

441310 ...................................... 1.6 109.5 0.6 30.7 3,004.6 0.643 .................... 14.0 7.0 

Automotive Parts and Accessories Stores .......................... 10.0 35.5 5.0 .................... .................... 14.0 .................... .................... ....................

441320 ...................................... 2.0 92.0 0.6 25.9 1,399.2 0.647 .................... 14.0 7.0 

Tire Dealers ............................... 14.0 35.5 5.0 .................... .................... 14.0 .................... .................... ....................

442110 ...................................... 2.4 66.4 0.9 8.1 1,017.8 0.683 .................... 19.0 7.0 

Furniture Stores ........................ 14.0 35.5 10.0 .................... .................... 19.0 .................... .................... ....................

442210 ...................................... 1.3 6.4 0.4 2.1 93.7 0.441 .................... 5.0 7.0 

Floor Covering Stores ............... 7.0 5.0 5.0 .................... .................... 5.0 .................... .................... ....................

442291 ...................................... 0.6 5.6 .................... 20.9 58.9 0.341 .................... 5.0 7.0 

Window Treatment Stores ........ 5.0 5.0 .................... .................... .................... 5.0 .................... .................... ....................

442299 ...................................... 1.8 146.4 0.6 39.1 2,175.8 0.776 .................... 19.0 7.0 

All Other Home Furnishings 

Stores .................................... 10.0 35.5 5.0 .................... .................... 35.5 .................... .................... ....................

443111 ...................................... 1.6 40.2 0.5 16.8 584.6 0.630 .................... 10.0 9.0 

Household Appliance Stores ..... 10.0 19.0 5.0 .................... .................... 14.0 .................... .................... ....................

443112 ...................................... 3.6 575.9 1.0 68.9 8,351.1 0.869 .................... 25.5 9.0 

Radio, Television and Other 

Electronics Stores .................. 19.0 35.5 14.0 .................... 35.5 35.5 .................... .................... ....................

443120 ...................................... 2.2 285.2 0.6 52.5 2,192.0 0.782 9.7 25.5 9.0 

Computer and Software Stores 14.0 35.5 5.0 .................... 35.5 35.5 .................... .................... ....................

443130 ...................................... 2.6 423.0 0.7 54.3 427.9 0.770 .................... 19.0 7.0 

Camera and Photographic Supplies Stores ............................ 14.0 35.5 7.0 .................... 19.0 35.5 .................... .................... ....................

444110 ...................................... 37.3 4,210.0 13.2 91.1 21,591.9 0.960 .................... 35.5 7.0 

Home Centers ........................... 35.5 35.5 35.5 .................... 35.5 35.5 .................... .................... ....................

444120 ...................................... 2.7 302.7 0.9 47.3 943.7 0.767 .................... 25.5 7.0 

Paint and Wallpaper Stores ...... 14.0 35.5 10.0 .................... 35.5 35.5 .................... .................... ....................

444130 ...................................... 1.3 21.7 0.5 13.4 556.5 0.496 ¥10.2 7.0 7.0 

Hardware Stores ....................... 7.0 10.0 5.0 .................... .................... 5.0 10.0 .................... ....................

444190 ...................................... 3.3 36.9 1.1 8.7 2,100.2 0.695 .................... 19.0 7.0 

Other Building Material Dealers 19.0 19.0 14.0 .................... .................... 25.5 .................... .................... ....................

444210 ...................................... 1.1 3.3 0.4 2.1 23.4 0.391 .................... 5.0 7.0 

Outdoor Power Equipment 

Stores .................................... 7.0 5.0 5.0 .................... .................... 5.0 .................... .................... ....................

444220 ...................................... 1.9 22.1 0.7 12.1 800.1 0.634 .................... 10.0 7.0 

Nursery and Garden Centers .... 10.0 10.0 7.0 .................... .................... 14.0 .................... .................... ....................

445110 ...................................... 9.3 852.4 1.8 32.5 32,122.8 0.915 66.3 30.0 27.0 

Supermarkets and Other Grocery (except Convenience) 

Stores .................................... 35.5 35.5 25.5 .................... .................... 35.5 .................... .................... ....................

445120 ...................................... 0.8 15.9 0.2 15.5 791.3 0.353 .................... 5.0 27.0 

Convenience Stores .................. 5.0 5.0 5.0 .................... .................... 5.0 .................... .................... ....................

445210 ...................................... 0.8 4.4 0.2 6.5 71.6 0.336 .................... 5.0 7.0 

Meat Markets ............................ 5.0 5.0 5.0 .................... .................... 5.0 .................... .................... ....................

445220 ...................................... 0.8 3.1 .................... 5.3 19.9 0.340 .................... 5.0 7.0 

Fish and Seafood Markets ........ 5.0 5.0 .................... .................... .................... 5.0 .................... .................... ....................

445230 ...................................... 0.9 5.5 0.1 5.4 37.6 0.428 26.1 5.0 7.0 

Fruit and Vegetable Markets ..... 5.0 5.0 5.0 .................... .................... 5.0 .................... .................... ....................

445291 ...................................... 0.5 19.6 0.2 36.1 126.0 0.499 .................... 5.0 7.0 

Baked Goods Stores ................. 5.0 7.0 5.0 .................... .................... 5.0 .................... .................... ....................

445292 ...................................... 0.7 25.4 0.3 41.2 139.3 0.627 .................... 7.0 7.0 

Confectionery and Nut Stores ... 5.0 10.0 5.0 .................... 5.0 10.0 .................... .................... ....................

445299 ...................................... 0.4 3.5 0.1 11.3 46.4 0.264 .................... 5.0 7.0 

All Other Specialty Food Stores 5.0 5.0 5.0 .................... .................... 5.0 .................... .................... ....................

445310 ...................................... 1.1 14.9 0.3 8.3 583.0 0.403 .................... 5.0 7.0 

Beer, Wine and Liquor Stores .. 7.0 5.0 5.0 .................... .................... 5.0 .................... .................... ....................

446110 ...................................... 7.8 376.9 1.6 52.8 20,311.0 0.804 ¥20.2 25.5 7.0 

Pharmacies and Drug Stores .... 35.5 35.5 19.0 .................... 35.5 35.5 10.0 .................... ....................

446120 ...................................... 1.2 162.6 0.5 56.8 892.5 0.748 .................... 25.5 7.0 

Cosmetics, Beauty Supplies 

and Perfume Stores .............. 7.0 35.5 5.0 .................... 35.5 35.5 .................... .................... ....................

446130 ...................................... 1.1 88.3 0.4 44.1 733.0 0.642 .................... 19.0 7.0 

Optical Goods Stores ................ 7.0 35.5 5.0 .................... 35.5 14.0 .................... .................... ....................

446191 ...................................... 0.8 67.5 .................... 31.1 361.8 0.527 .................... 14.0 7.0 

Food (Health) Supplement 

Stores .................................... 5.0 35.5 .................... .................... .................... 5.0 .................... .................... ....................

446199 ...................................... 1.1 5.3 .................... 11.4 188.2 0.492 .................... 7.0 7.0 

All Other Health and Personal 

Care Stores ........................... 7.0 5.0 .................... .................... .................... 5.0 .................... .................... ....................


pwalker on DSK8KYBLC1PROD with PROPOSALS
Federal Register / Vol. 74, No. 202 / Wednesday, October 21, 2009 / Proposed Rules 53931 

TABLE 3—SIZE STANDARDS SUPPORTED BY EACH INDUSTRY FACTOR—Continued 

[Millions of dollars] 

(1) NAICS 

(2) Simple 

average firm 

size 

(3) Weighted average 

firm size 

(4) Average 

assets size 

(5) Four-firm 

ratio (%) 

(6) Four-firm 

average 

size 

(7) Gini coefficient 

(8) Federal 

contract 

factor (%) 

(9) Revised 

size 

standard 

(10) Current 

size 

standard 

447110 ...................................... 4.2 150.8 0.7 10.4 4,854.2 0.723 .................... 25.5 27.0 

Gasoline Stations with Convenience Stores ........................... 25.5 35.5 7.0 .................... .................... 30.0 .................... .................... ....................

447190 ...................................... 2.7 35.7 0.4 19.2 2,993.6 0.645 .................... 14.0 9.0 

Other Gasoline Stations ............ 14.0 19.0 5.0 .................... .................... 14.0 .................... .................... ....................

448110 ...................................... 1.4 41.5 0.6 27.6 546.9 0.635 .................... 10.0 9.0 

Men’s Clothing Stores ............... 10.0 19.0 5.0 .................... .................... 14.0 .................... .................... ....................

448120 ...................................... 2.2 180.2 0.8 30.5 2,334.0 0.812 .................... 25.5 9.0 

Women’s Clothing Stores ......... 14.0 35.5 7.0 .................... .................... 35.5 .................... .................... ....................

448130 ...................................... 2.5 176.3 .................... 58.5 1,035.4 0.851 .................... 30.0 7.0 

Children’s and Infants’ Clothing 

Stores .................................... 14.0 35.5 .................... .................... 35.5 35.5 .................... .................... ....................

448140 ...................................... 8.1 526.1 3.1 47.5 7,579.2 0.930 .................... 35.5 9.0 

Family Clothing Stores .............. 35.5 35.5 35.5 .................... 35.5 35.5 .................... .................... ....................

448150 ...................................... 1.1 46.1 0.4 52.9 360.9 0.728 .................... 14.0 7.0 

Clothing Accessories Stores ..... 7.0 25.5 5.0 .................... 14.0 30.0 .................... .................... ....................

448190 ...................................... 1.1 59.7 0.4 43.6 868.0 0.663 .................... 19.0 7.0 

Other Clothing Stores ............... 7.0 35.5 5.0 .................... 35.5 19.0 .................... .................... ....................

448210 ...................................... 3.3 256.6 1.4 39.9 2,292.5 0.842 .................... 25.5 9.0 

Shoe Stores .............................. 19.0 35.5 19.0 .................... .................... 35.5 .................... .................... ....................

448310 ...................................... 1.2 113.2 0.8 23.8 1,385.1 0.625 .................... 14.0 7.0 

Jewelry Stores ........................... 7.0 35.5 7.0 .................... .................... 10.0 .................... .................... ....................

448320 ...................................... 2.0 61.0 .................... 49.8 192.3 0.750 .................... 25.5 7.0 

Luggage and Leather Goods 

Stores .................................... 14.0 35.5 .................... .................... 7.0 35.5 .................... .................... ....................

451110 ...................................... 1.4 102.4 0.6 18.1 1,134.1 0.636 54.4 14.0 7.0 

Sporting Goods Stores .............. 7.0 35.5 5.0 .................... .................... 14.0 .................... .................... ....................

451120 ...................................... 2.7 488.2 1.0 71.7 2,903.1 0.853 .................... 25.5 7.0 

Hobby, Toy and Game Stores .. 14.0 35.5 14.0 .................... 35.5 35.5 .................... .................... ....................

451130 ...................................... 1.1 194.2 .................... 59.4 580.9 0.700 .................... 25.5 7.0 

Sewing, Needlework and Piece 

Goods Stores ......................... 7.0 35.5 .................... .................... 25.5 25.5 .................... .................... ....................

451140 ...................................... 1.4 69.6 0.7 30.2 378.2 0.580 .................... 10.0 7.0 

Musical Instrument and Supplies Stores ............................ 7.0 35.5 7.0 .................... .................... 5.0 .................... .................... ....................

451211 ...................................... 2.7 406.2 1.1 65.6 2,469.3 0.846 .................... 25.5 7.0 

Book Stores ............................... 19.0 35.5 14.0 .................... 35.5 35.5 .................... .................... ....................

451212 ...................................... 0.5 6.1 .................... 17.1 34.6 0.354 .................... 5.0 7.0 

News Dealers and Newsstands 5.0 5.0 .................... .................... .................... 5.0 .................... .................... ....................

451220 ...................................... 2.2 259.4 .................... 57.7 1,042.1 0.836 .................... 30.0 7.0 

Prerecorded Tape, Compact 

Disc and Record Stores ........ 14.0 35.5 .................... .................... 35.5 35.5 .................... .................... ....................

452111 ...................................... 2,227.1 3,926.7 890.8 72.1 15,654.5 0.434 .................... 30.0 27.0 

Department Stores (except Discount Department Stores) ..... 35.5 35.5 35.5 .................... 35.5 5.0 .................... .................... ....................

452112 ...................................... 3,433.0 8,326.5 .................... 95.0 31,807.8 0.588 .................... 25.5 27.0 

Discount Department Stores ..... 35.5 35.5 .................... .................... 35.5 5.0 .................... .................... ....................

452910 ...................................... 11,953.3 17,358.4 .................... 92.1 44,059.2 0.312 .................... 25.5 27.0 

Warehouse Clubs and Superstores ..................................... 35.5 35.5 .................... .................... 35.5 5.0 .................... .................... ....................

452990 ...................................... 3.5 359.5 1.4 50.3 4,178.7 0.869 .................... 30.0 11.0 

All Other General Merchandise 

Stores .................................... 19.0 35.5 19.0 .................... 35.5 35.5 .................... .................... ....................

453110 ...................................... 0.3 1.1 0.1 1.7 27.9 0.112 .................... 5.0 7.0 

Florists ....................................... 5.0 5.0 5.0 .................... .................... 5.0 .................... .................... ....................

453210 ...................................... 4.3 632.4 1.2 78.1 4,027.6 0.875 5.7 30.0 7.0 

Office Supplies and Stationery 

Stores .................................... 25.5 35.5 14.0 .................... 35.5 35.5 .................... .................... ....................

453220 ...................................... 0.6 14.9 0.2 12.3 491.1 0.464 .................... 5.0 7.0 

Gift, Novelty and Souvenir 

Stores .................................... 5.0 5.0 5.0 .................... .................... 5.0 .................... .................... ....................

453310 ...................................... 0.6 5.2 0.3 9.9 191.5 0.457 .................... 5.0 7.0 

Used Merchandise Stores ......... 5.0 5.0 5.0 .................... .................... 5.0 .................... .................... ....................

453910 ...................................... 1.4 452.3 0.3 55.4 1,050.8 0.684 .................... 19.0 7.0 

Pet and Pet Supplies Stores ..... 7.0 35.5 5.0 .................... 35.5 19.0 .................... .................... ....................

453920 ...................................... 0.7 10.5 0.5 8.9 94.2 0.462 .................... 5.0 7.0 

Art Dealers ................................ 5.0 5.0 5.0 .................... .................... 5.0 .................... .................... ....................

453930 ...................................... 2.6 48.7 1.3 20.2 481.0 0.592 .................... 14.0 13.0 

Manufactured (Mobile) Home 

Dealers .................................. 14.0 25.5 14.0 .................... .................... 5.0 .................... .................... ....................

453991 ...................................... 1.6 7.0 0.3 11.7 190.7 0.531 .................... 5.0 7.0 

Tobacco Stores ......................... 10.0 5.0 5.0 .................... .................... 5.0 .................... .................... ....................

453998 ...................................... 0.8 6.9 0.3 6.9 206.9 0.443 4.2 5.0 7.0 

All Other Miscellaneous Store 

Retailers (except Tobacco 

Stores) ................................... 5.0 5.0 5.0 .................... .................... 5.0 .................... .................... ....................

454111 ...................................... 4.5 70.3 1.4 .................... .................... 0.822 .................... 30.0 25.0 

Electronic Shopping .................. 25.5 35.5 19.0 .................... .................... 35.5 .................... .................... ....................


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TABLE 3—SIZE STANDARDS SUPPORTED BY EACH INDUSTRY FACTOR—Continued 

[Millions of dollars] 

(1) NAICS 

(2) Simple 

average firm 

size 

(3) Weighted average 

firm size 

(4) Average 

assets size 

(5) Four-firm 

ratio (%) 

(6) Four-firm 

average 

size 

(7) Gini coefficient 

(8) Federal 

contract 

factor (%) 

(9) Revised 

size 

standard 

(10) Current 

size 

standard 

454112 ...................................... 13.4 320.7 .................... .................... .................... 0.933 .................... 35.5 25.0 

Electronic Auctions .................... 35.5 35.5 .................... .................... .................... 35.5 .................... .................... ....................

454113 ...................................... 10.0 249.6 3.1 .................... .................... 0.907 .................... 35.5 25.0 

Mail Order Houses .................... 35.5 35.5 35.5 .................... .................... 35.5 .................... .................... ....................

454210 ...................................... 1.4 30.6 0.5 20.7 365.5 0.658 .................... 10.0 7.0 

Vending Machine Operators ..... 7.0 14.0 5.0 .................... .................... 19.0 .................... .................... ....................

454319 ...................................... 0.3 0.7 .................... 15.3 2.5 0.098 .................... 5.0 7.0 

Other Fuel Dealers .................... 5.0 5.0 .................... .................... .................... 5.0 .................... .................... ....................

454390 ...................................... 1.1 22.3 0.3 15.0 807.0 0.596 .................... 7.0 7.0 

Other Direct Selling Establishments ..................................... 7.0 10.0 5.0 .................... .................... 7.0 .................... .................... ....................

As can be seen in Table 3, the results 

of SBA analyses of industry and Federal 

contracting data would support 

reducing the current size standards for 

23 of 76 industries in the Retail Trade 

Sector. However, SBA believes that 

lowering size standard for those 

industries would not be in the best 

interests of small businesses in these 

difficult times when the economy is in 

a deep recession. 

Aiming to promote economic recovery 

and to preserve and create jobs the U.S. 

Congress passed and the President 

signed the American Recovery and 

Reinvestment Act of 2009 (Recovery 

Act). The purposes and goals of the 

Recovery Act are to promote economic 

recovery and to preserve and create jobs. 

Under the Recovery Act, SBA has 

changed its various programs to assist 

small businesses, including the 

following: (1) Temporary reduction or 

elimination of fees in the 7(a) and 504 

loan guarantee programs; (2) creation of 

a temporary 90 percent guarantee loan 

program; (3) creation of a temporary 

Secondary Market Guarantee Authority 

to provide a Federal guarantee for pools 

of first lien 504 loans that are to be sold 

to third-party investors; (4) new 

authority for refinancing community 

development loans under the 504 

program; (5) revision of the job creation 

goals of the 504 program; (6) 

simplification of the maximum leverage 

limits and aggregate investment limits 

required of Small Business Investment 

Companies; (7) temporary authority to 

provide loans on a deferred basis to 

viable small business concerns that have 

a qualifying small business loan and are 

experiencing immediate financial 

hardship; (8) temporary increase in the 

surety bond maximum amount; (9) 

establishment of a Secondary Market 

Lending Authority to make loans to 

systemically important broker dealers in 

SBA’s 7(a) secondary market; and (10) 

application of SBA’s Certified 

Development Company (CDC) 

alternative size standard to its 7(a) 

Business Loan Program (see 13 CFR 

121.301). 

SBA believes that to reduce size 

standards and thereby reduce the 

number of firms that can participate in 

its financial and other assistance 

programs would run counter to what it 

is trying to do for small businesses. 

Again, the non-manufacturer size 

standard of 500 employees applies for 

purposes of Federal procurement of 

supplies. Reducing size eligibility for 

Federal financial and other assistance 

would not preserve or create more jobs; 

rather, it would have the opposite effect. 

SBA intends for the proposed size 

standards, if adopted, to remain in effect 

unless and until it receives information 

or data that suggests a change is needed. 

Evaluation of Federal Contracting and 

SBA Loan Data 

Besides industry structure, SBA also 

evaluates Federal contracting data to 

assess the extent to which small 

businesses are successful in getting 

Federal contracts under the existing size 

standards. However, the available data 

on Federal contracting are limited to 

identifying businesses as small or other 

than small, with no information on 

exact size of businesses receiving 

Federal contracts in order to conduct a 

more precise analysis. Moreover, a 

procurement for supplies should be 

classified under a manufacturing NAICS 

code. Consequently, the available data 

pertains to procurements that have been 

misclassified by procuring agencies. 

Given limited data, for the current 

comprehensive size review, SBA has 

decided to designate a size standard at 

one level higher than their current size 

standard for industries where the small 

business share of total Federal 

contracting dollars is between 10 and 30 

percentage points lower than their 

shares in total industry receipts and at 

two levels higher than the current size 

standard if the difference is higher than 

30 percentage points. 

SBA has chosen not to designate a 

size standard for the Federal contracting 

factor alone that is higher than two 

levels above the current size standard 

because doing so would result in most 

cases of designating a size standard 

more than twice the current size 

standard. Given the limitations of the 

FPDS data, and the complex 

relationships among a number of 

variables affecting small business 

participation in the Federal 

marketplace, SBA believes that a larger 

adjustment to size standards based on 

Federal contracting activity should be 

based on a more detailed analysis of the 

impact of any subsequent revision to the 

current size standard. In limited 

situations, however, SBA may conduct 

a more extensive examination of Federal 

contracting experience to support a 

different size standard than indicated by 

this general rule to take into 

consideration significant and unique 

aspects of small business 

competitiveness in the Federal contract 

market. SBA welcomes comment on its 

methodology of incorporating the 

Federal contracting factor in the size 

standard analysis and suggestions for 

alternative methods and other relevant 

information on small business 

experience in Federal contract market. 

Only nine industries in Sector 44–45, 

Retail Trade, received an average of 

$100 million or more annually in 

Federal contracting dollars during fiscal 

years 2006–2008. Those are the 

industries that have a Federal 

contracting factor in column 8 of Table 

3. In seven of these nine industries, 

because the small business share of 

Federal contracting dollars was already 

higher than the small business share of 

industry’s total receipts (positive values 

in column 8 of Table 3), no size 

standard was estimated for the Federal 

contracting factor. However, in two of 

these nine industries, namely NAICS 

444130, Hardware Stores, and NAICS 

446110, Pharmacies and Drug Stores, for 


pwalker on DSK8KYBLC1PROD with PROPOSALS
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which small business share of Federal 

contracting dollars was more than 10 

percent lower than small business share 

of industry’s total receipts, a separate 

size standard was estimated for the 

Federal contracting factor. The latest 

data show that Federal contracting 

activity is insignificant for most of the 

industries in Sector 44–45 and, for a few 

industries where it is significant small 

businesses seem to be doing well in 

most cases in terms of their share in the 

Federal marketplace relative to their 

share in industry’s total sales. 

Before deciding on an industry’s size 

standard, SBA also considers the impact 

of new or revised standards on SBA’s 

loan programs. SBA examined 7(a) Loan 

Program data for fiscal years 2006–2008 

to assess whether the existing or 

proposed size standards need further 

adjustments to ensure credit 

opportunities for small businesses 

though that program. For the Retail 

Trade industries, primarily small 

businesses that are much smaller than 

the current size standards use the 7(a) 

Loan Program. Based on that analysis, 

no size standard in Sector 44–45, Retail 

Trade, needs an adjustment based on 

this factor. 

Other Considerations 

Alternative Size Standards for New 

Car (NAICS 441110) and Used Car 

Dealers (NAICS 441120) Industries: SBA 

proposes to increase to the existing size 

standard for the New Car Dealers 

industry from $29 million to $30 

million in annual receipts and to retain 

the current standard of $23 million in 

annual receipts for the Used Car Dealers 

industry. 

However, based on industry data, 

SBA believes that an employee-based 

size standard might also be appropriate 

for these two industries, in lieu of one 

based on annual receipts. Industry 

associations have also suggested this as 

an alternative. They cite the variation in 

prices of car models for creating 

inequity in size eligibility under the 

receipt-based standard. For example, 

two dealers selling the same number of 

units will have different receipt levels 

depending on the models they sell. 

SBA has traditionally applied a 

receipts-based measure to determine the 

size of a small business for most 

industries, including Retail Trade. 

Receipts is the preferred measure 

because it represents the value of a 

firm’s output. Other measures of size are 

used for industries where receipts may 

skew the value added contributed by the 

firm in the production of goods and 

services. For example, number of 

employees is a better measure of size 

than receipts for industries in which 

firms have relatively low operational 

costs (labor and overhead, for example) 

in relation to their total receipts. This 

applies to the Wholesale Trade 

industries in which the value of the 

product sold greatly exceeds the cost of 

labor and capital used to generate a 

given level of receipts. Similarly, in the 

manufacturing industries, two 

manufacturers with the same number of 

employees may produce significantly 

different levels of receipts depending on 

the stage of manufacturing in the 

production process. Thus, SBA believes 

that number of employees more 

accurately reflects the value added by 

each manufacturer than the level of 

receipts. 

Car dealers have characteristics very 

similar to wholesale trade firms. A large 

proportion of the receipts of a car dealer 

account for the value of a manufactured 

product. A car dealer obtains a 

relatively small share of the total value 

of each unit sold, but generates 

significant receipts per employee. 

Furthermore, an unintended 

consequence of using receipts can arise 

from the variation in values of the car 

models sold—using receipts might 

exclude from eligibility for small 

business programs those car dealers that 

sell a greater proportion of high-valued 

automobiles than other dealers that sell 

lower priced models. 

SBA estimates the average revenue 

(sales) per employee in 2008 at $660,000 

and $520,000 for New Car Dealers and 

Used Car Dealers, respectively, based on 

an analysis of data from the special 

tabulation of the 2002 Economic Census 

(as referenced above) with adjustment 

for inflation since 2002. Based on these 

values, the proposed receipts-based size 

standard of $30 million for New Car 

Dealers would convert to a range of 45 

to 50 employees. At the 50-employee 

size standard level, about 70 percent of 

firms in the New Car Dealers industry 

would be considered small compared to 

nearly 75 percent that would be 

considered small under the proposed 

$30 million receipts based standard. 

Thus, to ensure that firms that would be 

classified as small under the $30 million 

receipts based standard are also 

classified as small under an employeebased size standard, the employee-based 

standard should be more than 50 

employees. Similarly, at the current size 

standard of $23 million in annual 

receipts would also convert to a range 

of 45 to 50 employees for Used Car 

Dealers. At the 50-employee size 

standard, nearly 98 percent of firms in 

the Car Dealers industry would be 

considered small, almost the same as 

that under the existing $23 million 

receipts based standard. Based on these 

estimates, SBA is also considering an 

alternative size standard of 100 

employees for the New Car Dealers 

industry and 50 employees for the Used 

Car Dealers industry. SBA believes that 

these levels will ensure that small car 

dealers eligible under the receipts based 

size standards would also be eligible at 

these alternative employee based size 

standards. 

SBA requests comments on whether 

an employee-based size standard for 

these two industries is more appropriate 

than a receipts-based standard and on 

the alternative employee-based size 

standards. Depending upon the 

feedback received, SBA may consider 

adopting the alternative employee size 

standards in the final rule. 

Size Standard for Retail Aircraft 

Dealers: SBA has established a specific 

size standard of $10.0 million in average 

annual receipts for NAICS 441229, 

Retail Aircraft Dealers, as a separate 

category from the $7.0 million size 

standard for all other activities in 

NAICS 441229, All Other Motor Vehicle 

Dealers. As a sub-component of the 

industry, SBA has limited data on Retail 

Aircraft Dealers and cannot evaluate all 

industry factors to determine whether 

the current $10.0 million size standard 

is appropriate. The only useful source of 

data consists of the product line data 

from the Census Bureau’s 2002 

Economic Census publication titled 

‘‘Retail Trade, Subject Series, Product 

Lines, EC02–44SL–LS, October 2005.’’ 

The product line data include 

information on number of 

establishments and receipts at subindustry levels, based on which SBA 

estimated the average establishment size 

of Aircraft Dealers and All Other Motor 

Vehicle Dealers. SBA estimated average 

assets size by applying the sales to 

assets ratio for the All Other Motor 

Vehicle Dealers industry to average 

establishment size estimated from the 

Census Bureau’s product line data. 

These estimates, as shown in Table 3, 

support an increase to the size standard 

for Retail Aircraft Dealers from $10 

million to $19 million. 

SBA also analyzed the trends on 

average establishment size for Retail 

Aircraft Dealers and All Other Motor 

Vehicle Dealers between 1997 and 2002 

using the product line data from the 

1997 and 2002 Economic Censuses. The 

analysis showed that from 1997 to 2002 

the average establishment size for Retail 

Aircraft Dealers increased at a much 

higher rate than for the overall industry, 

also suggesting an increase in the 

current size standard. 

While the data are limited on Retail 

Aircraft Dealers, the available data, 

nonetheless, support increasing its size 


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standard to $19 million. SBA welcomes 

comments on the appropriateness of the 

proposed size standard and alternative 

data sources for Retail Aircraft Dealers 

that may be used to more fully evaluate 

the size standard. Comments on an 

alternative higher or lower size standard 

should provide specific data or other 

information supporting the basis for that 

position. 

Size Standards for the Heating Oil 

Dealers (NAICS 454311) and Liquefied 

Petroleum Gas (Bottled Gas) Dealers 

(NAICS 454312) Industries: On July 22, 

2008 (73 FR 42517), based on a review 

of the latest available data on industry 

characteristics and other relevant 

information, SBA changed the small 

business size standard for NAICS 

454311, Heating Oil Dealers, from $11.5 

million in average annual receipts to 50 

employees, and the size standard for 

NAICS 454312, Liquefied Petroleum Gas 

(Bottled Gas) Dealers, from $6.5 million 

in average annual receipts to 50 

employees. SBA believes that those 

employee-based size standards are still 

appropriate for these industries and 

hence SBA is not proposing their 

revision here. 

Application of Retail Trade and 

Wholesale Trade Industry Size 

Standards to Federal Procurements and 

Subcontracts: This proposed rule also 

modifies SBA regulations to clarify the 

existing policy that Federal contracts 

and subcontracts for supplies shall not 

be classified with a Wholesale Trade 

(Sector 42) or Retail Trade (Sector 44– 

45) NAICS industry code. 13 CFR 

121.402(b) requires a contracting officer 

to classify a Federal supply contract or 

subcontract to a Federal prime contract 

under an appropriate manufacturing 

NAICS industry code. A Retail Trade or 

Wholesale Trade business that supplies 

a manufactured product on a Federal 

procurement contract or on a 

subcontract to a Federal prime contract 

is deemed a ‘‘nonmanufacturer’’ and is 

a small business nonmanufacturer if it 

has 500 or fewer employees and meets 

other requirements set forth in the 

regulations. The Table of Size Standards 

(see 121.201) contains a note at the 

heading of the Retail Trade and 

Wholesale Trade Sectors stating that the 

industry size standards are ‘‘Not 

applicable to Government procurement 

of supplies.’’ However, SBA has 

observed numerous misclassifications of 

procurement solicitations and contract 

awards reported in the Federal 

Procurement Data System—Next 

Generation with Retail Trade and 

Wholesale Trade NAICS codes. 

To better inform Federal government 

contracting officers and other users of 

the proper NAICS classification of 

Federal supply prime contracts, and for 

supply subcontracts to Federal prime 

contractors, SBA proposes to modify the 

existing note at the heading to the 

Wholesale Trade and Retail Trade 

Sectors in the Table of Size Standards 

(13 CFR 121.201) to read as follows: 

‘‘These NAICS codes shall not be used 

to classify Government acquisitions for 

supplies. They also shall not be used by 

Federal government contractors when 

subcontracting for the acquisition for 

supplies. The applicable manufacturing 

NAICS code shall be used to classify 

acquisitions for supplies. A Wholesale 

Trade or Retail Trade business concern 

submitting an offer or a quote on a 

supply acquisition is categorized as a 

nonmanufacturer and deemed small if it 

has 500 or fewer employees and meets 

the requirements of 13 CFR 121.406.’’ 

SBA is also proposing to revise the 

language in 13 CFR 121.402(b) to be 

consistent with the revised table 

headings by revising the end of the 

regulation to read ‘‘Acquisitions for 

supplies must be classified under the 

appropriate manufacturing NAICS code, 

not under a wholesale trade or retail 

trade NAICS code. A concern that 

submits an offer or quote for a contract 

or subcontract where the NAICS code 

assigned to the contract or subcontract 

is one for supplies, and furnishes a 

product it did not itself manufacture or 

produce, is categorized as a 

nonmanufacturer and deemed small if it 

has 500 or fewer employees and meets 

the requirements of 13 CFR 121.406.’’ 

Summary of Size Standards Changes 

Based on the analyses of currently 

available industry and Federal 

contracting data, SBA proposes to 

increase size standards for 48 of 76 

industries in Sector 44–45, Retail Trade. 

These industries and their proposed size 

standards are shown in Table 4. The 

analyses supported retaining the 

existing standards for five industries in 

that Sector. 

SBA’s analyses support a decrease to 

the current size standard for 23 

industries in Retail Trade. However, as 

discussed above, SBA feels that 

proposing to lower small business size 

standards would be inconsistent with its 

ongoing effort to promote small business 

assistance under the Recovery Act. 

Therefore, SBA proposes to retain the 

current size standards for those 

industries. SBA intends for the 

proposed size standards, if adopted, to 

remain in effect unless and until it 

receives information or data that 

suggests a change is needed. 

TABLE 4—SUMMARY OF PROPOSED SIZE STANDARD REVISIONS

NAICS Current size 

standard 

Revised size 

standard 

441110 New Car Dealers ...................................................................................................................................... $29.0 $30.0 

441210 Recreational Vehicle Dealers ................................................................................................................... 7.0 30.0 

441221 Motorcycle, ATV, and Personal Watercraft Dealers ................................................................................ 7.0 14.0 

441222 Boat Dealers ............................................................................................................................................ 7.0 14.0 

Except Aircraft Dealers, Retail .............................................................................................................................. 10.0 25.5 

441310 Automotive Parts and Accessories Stores .............................................................................................. 7.0 14.0 

441320 Tire Dealers .............................................................................................................................................. 7.0 14.0 

442110 Furniture Stores ....................................................................................................................................... 7.0 19.0 

442299 All Other Home Furnishings Stores ......................................................................................................... 7.0 19.0 

443111 Household Appliance Stores .................................................................................................................... 9.0 10.0 

443112 Radio, Television and Other Electronics Stores ...................................................................................... 9.0 25.5 

443120 Computer and Software Stores ............................................................................................................... 9.0 25.5 

443130 Camera and Photographic Supplies Stores ............................................................................................ 7.0 19.0 

444110 Home Centers .......................................................................................................................................... 7.0 35.5 

444120 Paint and Wallpaper Stores ..................................................................................................................... 7.0 25.5 

444190 Other Building Material Dealers ............................................................................................................... 7.0 19.0 

444220 Nursery and Garden Centers ................................................................................................................... 7.0 10.0 

445110 Supermarkets and Other Grocery (except Convenience) Stores ............................................................ 27.0 30.0 

446110 Pharmacies and Drug Stores ................................................................................................................... 7.0 25.5 

446120 Cosmetics, Beauty Supplies and Perfume Stores ................................................................................... 7.0 25.5 


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TABLE 4—SUMMARY OF PROPOSED SIZE STANDARD REVISIONS—Continued 

NAICS Current size 

standard 

Revised size 

standard 

446130 Optical Goods Stores ............................................................................................................................... 7.0 19.0 

446191 Food (Health) Supplement Stores ........................................................................................................... 7.0 14.0 

447190 Other Gasoline Stations ........................................................................................................................... 9.0 14.0 

448110 Men’s Clothing Stores .............................................................................................................................. 9.0 10.0 

448120 Women’s Clothing Stores ........................................................................................................................ 9.0 25.5 

448130 Children’s and Infants’ Clothing Stores ................................................................................................... 7.0 30.0 

448140 Family Clothing Stores ............................................................................................................................. 9.0 35.5 

448150 Clothing Accessories Stores .................................................................................................................... 7.0 14.0 

448190 Other Clothing Stores .............................................................................................................................. 7.0 19.0 

448210 Shoe Stores ............................................................................................................................................. 9.0 25.5 

448310 Jewelry Stores .......................................................................................................................................... 7.0 14.0 

448320 Luggage and Leather Goods Stores ....................................................................................................... 7.0 25.5 

451110 Sporting Goods Stores ............................................................................................................................. 7.0 14.0 

451120 Hobby, Toy and Game Stores ................................................................................................................. 7.0 25.5 

451130 Sewing, Needlework and Piece Goods Stores ........................................................................................ 7.0 25.5 

451140 Musical Instrument and Supplies Stores ................................................................................................. 7.0 10.0 

451211 Book Stores .............................................................................................................................................. 7.0 25.5 

451220 Prerecorded Tape, Compact Disc and Record Stores ............................................................................ 7.0 30.0 

452111 Department Stores (except Discount Department Stores) ...................................................................... 27.0 30.0 

452990 All Other General Merchandise Stores .................................................................................................... 11.0 30.0 

453210 Office Supplies and Stationery Stores ..................................................................................................... 7.0 30.0 

453910 Pet and Pet Supplies Stores .................................................................................................................... 7.0 19.0 

453930 Manufactured (Mobile) Home Dealers ..................................................................................................... 13.0 14.0 

454111 Electronic Shopping ................................................................................................................................. 25.0 30.0 

454112 Electronic Auctions ................................................................................................................................... 25.0 35.5 

454113 Mail Order Houses ................................................................................................................................... 25.0 35.5 

454210 Vending Machine Operators .................................................................................................................... 7.0 10.0 

Evaluation of Dominance in Field of 

Operation 

SBA has determined that for each 

industry in Sector 44–45, Retail Trade, 

no firm at or below the proposed size 

standard would be large enough to 

dominate its field of operation. A firm 

at the proposed size standard in each of 

these industries generates less than one 

percent of total industry receipts. This 

level of market share effectively 

precludes a firm at or below the 

proposed size standard from exerting a 

controlling effect on this industry. 

Request for Comments 

SBA invites public comments on the 

proposed rule, especially on the 

following areas. 

1. In an effort to simplify size 

standards, for this proposed rule, SBA 

has proposed a set of eight fixed size 

levels for receipts based size standards: 

$5.0 million, $7.0 million, $10.0 

million, $14.0 million, $19.0 million, 

$25.5 million, $30.0 million, and $35.5 

million. SBA invites comments on 

whether simplification of size standards 

in this way is necessary and if these 

proposed fixed size levels are 

appropriate, or suggestions on 

alternative approaches to simplifying 

small business size standards. 

2. For all industries in Sector 44–45, 

Retail Trade, SBA has proposed receipts 

based size standards ranging from $7 

million to $35.5 million. SBA seeks 

feedback on whether the levels of size 

standards it proposes seem right given 

the economic characteristics of each 

industry. SBA also seeks feedback and 

suggestions on alternative standards, if 

they would be more appropriate, 

including whether an employee based 

standard for certain industries is a more 

suitable measure of size, and what that 

employee level size standard should be. 

3. SBA’s proposed standards are 

based on its evaluation of five primary 

factors—average firm size, average 

assets size (as proxy of startup costs and 

entry barriers), four-firm concentration 

ratio, distribution of firms by size, and 

the level and small business share of 

Federal contracting dollars. SBA 

welcomes comments on these and other 

factors that interested parties believe are 

important to consider for describing 

industry characteristics when SBA 

evaluates its size standards. Please 

provide relevant data sources, if 

available. 

4. SBA derives its proposed standards 

by applying equal weights to each of the 

five primary factors in all industries. 

Should SBA continue with the equal 

weighting of each factor or should it 

give more weight to one or more factors? 

If it is more appropriate to weigh some 

factors more than others, SBA welcomes 

suggestions on specific weights for each 

factor along with supporting 

information. 

5. For some industries, SBA proposes 

to increase the existing size standards 

by a large amount, while for others the 

proposed increase is less. Should SBA, 

as a policy, limit the amount of increase 

or decrease to a size standard? Also 

should SBA, as a policy, establish 

certain minimum or maximum values 

for its size standards? SBA seeks 

suggestions on appropriate levels of 

change to size standards and on their 

minimum or maximum levels. 

6. For analytical simplicity and 

efficiency, SBA has refined its size 

standard methodology to obtain a single 

value as a proposed size standard 

instead of a range of values as was 

SBA’s methodology in its past size 

regulations. SBA welcomes any 

comments on this procedure and 

suggestions for alternative methods. 

Public comments on the above issues 

are very critical for SBA to validate its 

size standard methodology and move 

forward in a timely manner with review 

of size standards of other industry 

groups under the two-year 

comprehensive size review. 

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 


pwalker on DSK8KYBLC1PROD with PROPOSALS
53936 Federal Register / Vol. 74, No. 202 / Wednesday, October 21, 2009 / Proposed Rules 

proposed 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 

1. Is there a Need for the Regulatory 

Action? 

SBA believes that adjustments to 

certain size standards in Sector 44–45, 

Retail Trade, are needed to better reflect 

the economic characteristics of small 

businesses in those industries. SBA’s 

mission is to aid and assist small 

businesses through a variety of 

financial, procurement, business 

development, and advocacy programs. 

To assist effectively the intended 

beneficiaries of these programs, SBA 

must establish distinct definitions of 

which businesses are deemed small 

businesses. The Small Business Act (15 

U.S.C. 632(a)) delegates to SBA’s 

Administrator the responsibility for 

establishing small business definitions. 

The Act also requires that small 

business definitions vary to reflect 

industry differences. The 

supplementary information section of 

this proposed rule explains SBA’s 

methodology for analyzing a size 

standard for a particular industry. 

2. 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 various 

financial assistance programs, but not 

for Federal procurement preference 

programs reserved for small businesses. 

Since NAICS codes in Sector 44–45, 

Retail Trade, may not be used for 

Federal government procurement 

programs, the proposed size standards 

changes in this rule will not provide any 

benefits to companies that participate in 

these programs, and there will not be 

any additional costs to the Federal 

government’s procurement programs 

resulting from these proposed changes, 

if adopted in final form. 

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 businesses. In the 48 

industries within Sector 44–45 for 

which SBA has proposed to increase 

their size standards, about 8,800 

additional firms are estimated to obtain 

small business status and become 

eligible for these programs. In the 23 

industries for which SBA’s analyses 

indicated a lower size standard as 

appropriate, about 5,900 firms might 

have lost their small business status had 

SBA proposed lowering them. That 

number is about 2.0 percent of the total 

number of firms in those industries 

defined as small under the current 

standards. Thus, the net impact for the 

Sector as whole is about 8,800 

additional firms gaining and none losing 

small business status under the 

proposed rule. This will increase the 

small business share of total industry 

receipts for the Sector from 27 percent 

under the current size standards to 28 

percent under the proposed standards. 

The benefits of increasing certain size 

standards to a more appropriate level 

would accrue to two groups: (1) 

Businesses that benefit by gaining small 

business status from the higher size 

standard that also use small business 

assistance programs; and (2) growing 

small businesses that may exceed the 

current size standards in the near future 

and that will retain small business 

status from the higher size standard. 

Nearly 72 percent of Federal 

contracting dollars spent in Sector 44– 

45 during fiscal years 2006–2008 was 

accounted for by six of the 48 industries 

for which size standards have been 

proposed to increase. If NAICS codes in 

Sector 44–45 could be used for Federal 

contracting, SBA estimates that 

additional firms gaining small business 

status in those six industries under the 

proposed size standards could 

potentially obtain Federal contracts 

totaling up to between $80 million and 

$100 million per year. This represents 

nearly 2.0 percent of the $4.7 billion in 

average Federal contracts awarded to 

the Retail Trade Sector during fiscal 

years 2006–2008. The added 

competition for many of these 

procurements also would likely result in 

a lower price to the Government for 

procurements reserved for small 

businesses, but SBA is not able to 

quantify this benefit. However, as stated 

above, NAICS codes in this Sector may 

not be used for Federal government 

procurement. SBA anticipates that the 

contracting amounts identified in this 

Sector will be redistributed in the future 

to contracts identified by NAICS codes 

in Sector 31–33, Manufacturing. 

Under SBA’s 7(a) Guaranteed Loan 

Program and Certified Development 

Company (504) Program, SBA estimates 

that approximately 75 additional loans 

totaling between $35 million and $40 

million in new Federal loan guarantees 

could be made to these newly defined 

small businesses. Because of the size of 

the loan guarantees, however, most 

loans are made to small businesses well 

below the size standard. Further, under 

the Recovery Act, effective February 17, 

2009, SBA temporarily raised 

guarantees on its SBA’s 7(a) loan 

program and also temporarily 

eliminated fees for borrowers on SBA 

7(a) loans and for both borrowers and 

lenders on 504 Certified Development 

Company loans, through calendar year 

2009, or until the funds are exhausted. 

The fee elimination is retroactive to 

February 17, 2009, the day the Recovery 

Act was signed. Furthermore, SBA is 

developing a mechanism for refunding 

fees paid on loans since then. In 

addition, since SBA has applied its CDC 

alternative size standard to its 7(a) 

Business Loan Program, more capital is 

available to small businesses. Thus, 

increasing the size standards will likely 

result in an increase in small business 

guaranteed loans to 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 

would also benefit from SBA’s 

Economic Injury Disaster Loan (EIDL) 

Program. Since this program is 

contingent upon the occurrence and 

severity of a disaster, no meaningful 

estimate of benefits can be projected for 

future disasters. 

To the extent that 8,800 additional 

firms may become small under the 

proposed size standards there may be 

some additional administrative costs to 

the Federal Government associated with 

SBA guaranteed lending programs. 

Among businesses in this group seeking 

SBA assistance, there could be some 

additional costs associated with 

compliance and verification of small 

business status. These additional costs 

are likely to be minimal because 

mechanisms are already in place to 

handle these additional administrative 

requirements. 

The proposed size standards may 

have distributional effects among large 

and small businesses, but SBA cannot 

quantify its possible extent, because the 

data related to Federal procurement is a 

result of misclassification, because 

procurements for supplies should be 

coded in Sectors 31–33 rather than 

Sector 44–45. There will be more small 

businesses in Sector 44–45, but whether 

or not that will result in an increase in 

the number of small businesses in 

Sector 31–33 cannot be determined. 

The proposed revisions to the existing 

size standards for Retail Trade 

industries are consistent with SBA’s 

statutory mandate to assist small 

business. This regulatory action 

promotes the Administration’s 


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Federal Register / Vol. 74, No. 202 / Wednesday, October 21, 2009 / Proposed Rules 53937 

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, SBA has determined that this 

rule is drafted, to the extent practicable, 

in accordance with the standards set 

forth in that Order. 

Executive Order 13132 

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. 

Paperwork Reduction Act 

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 record keeping 

requirements, other than those required 

of SBA. 

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 in Sector 44– 

45, Retail Trade. As described above, 

this rule may affect small entities 

seeking SBA (7a) and 504 Guaranteed 

Loan Programs, SBA Economic Injury 

Disaster Loans, and other Federal small 

business programs. 

Immediately below, SBA sets forth an 

initial regulatory flexibility analysis 

(IRFA) of this proposed rule addressing 

the following questions: (1) What is the 

need for and objective of the rule? (2) 

what is SBA’s description and estimate 

of the number of small 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 

Retail Trade 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 an analysis of the 

latest data available to the Agency, SBA 

believes that the revised standards in 

this proposed 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? 

If this rule is adopted in its present 

form, SBA estimates that approximately 

8,800 additional firms will become 

small because of proposed increases in 

size standards in the 48 industries 

within Sector 44–45. That represents 

about 2.0 percent of approximately 

415,000 total firms in those industries. 

This will result in an increase in the 

small business share of total industry 

receipts for that Sector from about 27.0 

percent under the current size standards 

to about 28.0 percent under the 

proposed standards. 

(3) What are the Projected Reporting, 

Record Keeping, 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, record keeping 

or compliance requirements on small 

entities. 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 proposed rule overlaps with 

other Federal rules that use SBA’s size 

standards to define a small business. 

Under § 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 57988–57991, 

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? 

SBA is required to develop numerical 

size standards for identifying businesses 

eligible for Federal small business 

programs. Other than varying the size 

standards, no viable 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. 

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, 634(b)(6), 636(b), 

637(a), 644, and 662(5); and Public Law 105– 

135, sec. 401 et seq., 111 Stat. 2592. 

2. Amend the table in § 121.201 as 

follows: 

A. Revise the parenthetical phrase 

below the Sector 42 heading. 

B. Revise all entries under Sector 44– 

45. 

The revisions read as follows: 

§ 121.201 What size standards has SBA 

identified by North American Industry 

Classification System codes? 

* * * * * 


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53938 Federal Register / Vol. 74, No. 202 / Wednesday, October 21, 2009 / Proposed Rules 

SMALL BUSINESS SIZE STANDARDS BY NAICS INDUSTRY

NAICS codes NAICS U.S. industry title 

Size standards 

in millions of 

dollars 

Size standards 

in number of 

employees 

* * * * * * * 

Sector 42—Wholesale Trade 

(These NAICS codes shall not be used to classify Government acquisitions for supplies. They also shall not be used by Federal government 

contractors when subcontracting for the acquisition for supplies. The applicable manufacturing NAICS code shall be used to classify acquisitions for supplies. A Wholesale Trade or Retail Trade business concern submitting an offer or a quote on a supply acquisition is categorized 

as a nonmanufacturer and deemed small if it has 500 or fewer employees and meets the requirements of 13 CFR 121.406.) 

* * * * * * * 

Sector 44–45—Retail Trade 

(These NAICS codes shall not be used to classify Government acquisitions for supplies. They also shall not be used by Federal government 

contractors when subcontracting for the acquisition for supplies. The applicable manufacturing NAICS code shall be used to classify acquisitions for supplies. A Wholesale Trade or Retail Trade business concern submitting an offer or a quote on a supply acquisition is categorized 

as a nonmanufacturer and deemed small if it has 500 or fewer employees and meets the requirements of 13 CFR 121.406.) 

Subsector 441—Motor Vehicle and Parts Dealers 

441110 .............. New Car Dealers ...................................................................................................................... $30.0 ........................

441120 .............. Used Car Dealers ..................................................................................................................... 23.0 ........................

441210 .............. Recreational Vehicle Dealers ................................................................................................... 30.0 ........................

441221 .............. Motorcycle, ATV, and Personal Watercraft Dealers ................................................................ 14.0 ........................

441222 .............. Boat Dealers ............................................................................................................................. 14.0 ........................

441229 .............. All Other Motor Vehicle Dealers ............................................................................................... 7.0 ........................

Except, .............. Aircraft Dealers, Retail ............................................................................................................. 25.5 ........................

441310 .............. Automotive Parts and Accessories Stores ............................................................................... 14.0 ........................

441320 .............. Tire Dealers .............................................................................................................................. 14.0 ........................

Subsector 442—Furniture and Home Furnishings Stores 

442110 .............. Furniture Stores ........................................................................................................................ 19.0 ........................

442210 .............. Floor Covering Stores .............................................................................................................. 7.0 ........................

442291 .............. Window Treatment Stores ........................................................................................................ 7.0 ........................

442299 .............. All Other Home Furnishings Stores ......................................................................................... 19.0 ........................

Subsector 443—Electronics and Appliance Stores 

443111 .............. Household Appliance Stores .................................................................................................... 10.0 ........................

443112 .............. Radio, Television and Other Electronics Stores ...................................................................... 25.5 ........................

443120 .............. Computer and Software Stores ................................................................................................ 25.5 ........................

443130 .............. Camera and Photographic Supplies Stores ............................................................................. 19.0 ........................

Subsector 444—Building Material and Garden Equipment and Supplies Dealers 

444110 .............. Home Centers .......................................................................................................................... 35.5 ........................

444120 .............. Paint and Wallpaper Stores ..................................................................................................... 25.5 ........................

444130 .............. Hardware Stores ....................................................................................................................... 7.0 ........................

444190 .............. Other Building Material Dealers ............................................................................................... 19.0 ........................

444210 .............. Outdoor Power Equipment Stores ........................................................................................... 7.0 ........................

444220 .............. Nursery and Garden Centers ................................................................................................... 10.0 ........................

Subsector 445—Food and Beverage Stores 

445110 .............. Supermarkets and Other Grocery (except Convenience) Stores ............................................ 30.0 ........................

445120 .............. Convenience Stores ................................................................................................................. 27.0 ........................

445210 .............. Meat Markets ............................................................................................................................ 7.0 ........................

445220 .............. Fish and Seafood Markets ....................................................................................................... 7.0 ........................

445230 .............. Fruit and Vegetable Markets .................................................................................................... 7.0 ........................

445291 .............. Baked Goods Stores ................................................................................................................ 7.0 ........................

445292 .............. Confectionery and Nut Stores .................................................................................................. 7.0 ........................

445299 .............. All Other Specialty Food Stores ............................................................................................... 7.0 ........................

445310 .............. Beer, Wine and Liquor Stores .................................................................................................. 7.0 ........................

Subsector 446—Health and Personal Care Stores 

446110 .............. Pharmacies and Drug Stores ................................................................................................... 25.5 ........................

446120 .............. Cosmetics, Beauty Supplies and Perfume Stores ................................................................... 25.5 ........................


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SMALL BUSINESS SIZE STANDARDS BY NAICS INDUSTRY—Continued 

NAICS codes NAICS U.S. industry title 

Size standards 

in millions of 

dollars 

Size standards 

in number of 

employees 

446130 .............. Optical Goods Stores ............................................................................................................... 19.0 ........................

446191 .............. Food (Health) Supplement Stores ............................................................................................ 14.0 ........................

446199 .............. All Other Health and Personal Care Stores ............................................................................. 7.0 ........................

Subsector 447—Gasoline Stations 

447110 .............. Gasoline Stations with Convenience Stores ............................................................................ 27.0 ........................

447190 .............. Other Gasoline Stations ........................................................................................................... 14.0 ........................

Subsector 448—Clothing and Clothing Accessories Stores 

448110 .............. Men’s Clothing Stores .............................................................................................................. 10.0 ........................

448120 .............. Women’s Clothing Stores ......................................................................................................... 25.5 ........................

448130 .............. Children’s and Infants’ Clothing Stores .................................................................................... 30.0 ........................

448140 .............. Family Clothing Stores ............................................................................................................. 35.5 ........................

448150 .............. Clothing Accessories Stores .................................................................................................... 14.0 ........................

448190 .............. Other Clothing Stores ............................................................................................................... 19.0 ........................

448210 .............. Shoe Stores .............................................................................................................................. 25.5 ........................

448310 .............. Jewelry Stores .......................................................................................................................... 14.0 ........................

448320 .............. Luggage and Leather Goods Stores ........................................................................................ 25.5 ........................

Subsector 451—Sporting Good, Hobby, Book and Music Stores 

451110 .............. Sporting Goods Stores ............................................................................................................. 14.0 ........................

451120 .............. Hobby, Toy and Game Stores ................................................................................................. 25.5 ........................

451130 .............. Sewing, Needlework and Piece Goods Stores ........................................................................ 25.5 ........................

451140 .............. Musical Instrument and Supplies Stores .................................................................................. 10.0 ........................

451211 .............. Book Stores .............................................................................................................................. 25.5 ........................

451212 .............. News Dealers and Newsstands ............................................................................................... 7.0 ........................

451220 .............. Prerecorded Tape, Compact Disc and Record Stores ............................................................ 30.0 ........................

Subsector 452—General Merchandise Stores 

452111 .............. Department Stores (except Discount Department Stores) ....................................................... 30.0 ........................

452112 .............. Discount Department Stores .................................................................................................... 27.0 ........................

452910 .............. Warehouse Clubs and Superstores ......................................................................................... 27.0 ........................

452990 .............. All Other General Merchandise Stores .................................................................................... 30.0 ........................

Subsector 453—Miscellaneous Store Retailers 

453110 .............. Florists ...................................................................................................................................... 7.0 ........................

453210 .............. Office Supplies and Stationery Stores ..................................................................................... 30.0 ........................

453220 .............. Gift, Novelty and Souvenir Stores ............................................................................................ 7.0 ........................

453310 .............. Used Merchandise Stores ........................................................................................................ 7.0 ........................

453910 .............. Pet and Pet Supplies Stores .................................................................................................... 19.0 ........................

453920 .............. Art Dealers ................................................................................................................................ 7.0 ........................

453930 .............. Manufactured (Mobile) Home Dealers ..................................................................................... 14.0 ........................

453991 .............. Tobacco Stores ........................................................................................................................ 7.0 ........................

453998 .............. All Other Miscellaneous Store Retailers (except Tobacco Stores) .......................................... 7.0 ........................

Subsector 454—Nonstore Retailers 

454111 .............. Electronic Shopping .................................................................................................................. 30.0 ........................

454112 .............. Electronic Auctions ................................................................................................................... 35.5 ........................

454113 .............. Mail-Order Houses ................................................................................................................... 35.5 ........................

454210 .............. Vending Machine Operators ..................................................................................................... 10.0 ........................

454311 .............. Heating Oil Dealers .................................................................................................................. 12.5 ........................

454312 .............. Liquefied Petroleum Gas (Bottled Gas) Dealers ...................................................................... 25.5 ........................

454319 .............. Other Fuel Dealers ................................................................................................................... 7.0 ........................

454390 .............. Other Direct Selling Establishments ......................................................................................... 7.0 ........................


pwalker on DSK8KYBLC1PROD with PROPOSALS
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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