[Federal Register Volume 82, Number 186 (Wednesday, September 27, 2017)]
[Rules and Regulations]
[Pages 44886-44895]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-20705]


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SMALL BUSINESS ADMINISTRATION

13 CFR Part 121

RIN 3245-AG84


Small Business Size Standards; Adoption of 2017 North American 
Industry Classification System for Size Standards

AGENCY: U.S. Small Business Administration.

ACTION: Final rule.

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

SUMMARY: The U.S. Small Business Administration (SBA) is adopting, 
without change, its proposed revisions to small business size 
standards. With the adoption of the proposed changes, SBA incorporates 
the U.S. Office of Management and Budget's (OMB) North American 
Industry Classification System (NAICS) revision for 2017, identified as 
NAICS 2017, into its table of small business size standards. NAICS 2017 
created 21 new industries by reclassifying, combining, or splitting 29 
existing industries under changes made to NAICS in 2012 (NAICS 2012). 
SBA's size standards for these 21 new industries have resulted in an 
increase to size standards for six NAICS 2012 industries and part of 
one industry, a decrease to size standards for two, a change in the 
size standards measure from average annual receipts to number of 
employees for one, and no change in size standards for twenty 
industries and part of one industry.

DATES: This rule is effective October 1, 2017.

FOR FURTHER INFORMATION CONTACT: Dr. Jorge Laboy-Bruno, Office of Size 
Standards, (202) 205-6618 or <a href="/cdn-cgi/l/email-protection#196a70637c6a6d78777d786b7d6a596a7b78377e766f"><span class="__cf_email__" data-cfemail="fd8e9487988e899c93999c8f998ebd8e9f9cd39a928b">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: Effective October 1, 2000, SBA adopted NAICS 
1997 industry definitions as a basis for its table of small business 
size standards, replacing the 1987 Standard Industrial Classification 
(SIC) (65 FR 30836 (May 15, 2000)). Since then, OMB has issued four 
revisions to NAICS. SBA's table of size standards adopted the OMB's 
first revision, NAICS 2002, effective October 1, 2002 (67 FR 52597 
(August 13, 2002)), the second revision, NAICS 2007, effective October 
1, 2007 (72 FR 49639 (August 29, 2007)), and the third revision, NAICS 
2012, effective October 1, 2012 (77 FR 49991 (August 20, 2012)).
    OMB published its fourth and latest revision, NAICS 2017, ``Notice 
of NAICS 2017 final decisions'' in the Federal Register on August 8, 
2016 (81 FR 52584). The OMB notice stated that Federal statistical 
establishment data published for reference years beginning on or after 
January 1, 2017, should be published using NAICS 2017.
    As with the previous NAICS revisions, SBA is adopting the NAICS 
2017 revision at the beginning of the new fiscal year (October 1, 2017) 
following the OMB's release of the NAICS revision for reasons as set 
forth under the Justification for the October 1, 2017 Effective Date 
section, below:

Changes in NAICS 2017

    NAICS 2017 created 21 new NAICS industries by reclassifying, 
splitting, or merging 29 industries or their parts under NAICS 2012. Of 
those 21 new industries, five were created by merging two or more of 
thirteen NAICS 2012 industries in their entirety, while three were 
created by combining part of one industry with another industry. Three 
new industries were created by splitting two industries to two parts 
each with one part of each industry defined as a separate industry and 
combining other parts of the two industries to form a separate new 
industry. One new industry was formed by designating part of one 
industry as a separate industry. OMB also changed 6-digit NAICS codes 
for eight industries without changing their definitions and titles and 
amended the title of one industry without changing its 6-digit code. 
Table 1, ``NAICS 2012 Industries or Their Parts Matched to NAICS 2017 
Industries,'' below, shows the changes from NAICS 2012 to NAICS 2017.
    Complete information on the relationship between NAICS 2012 and 
NAICS 2017 is available on the U.S. Bureau of the Census (Census 
Bureau) Web site at http://www.census.gov/eos/

[[Page 44887]]

www/naics/. The Census Bureau's Web site also provides detailed 
documentation on Federal notices involving the replacement of SIC with 
NAICS, and all subsequent NAICS updates and revisions, including the 
August 8, 2016 ``Notice of NAICS 2017 final decisions,'' as well as 
concordances (i.e., correspondence tables) between SIC and NAICS 1997 
and NAICS 2002, and between subsequent NAICS revisions.

                 Table 1--NAICS 2012 Industries or Their Parts Matched to NAICS 2017 Industries
----------------------------------------------------------------------------------------------------------------
                              NAICS 2012 industry                         NAICS 2017       NAICS 2017 industry
     NAICS 2012 code                 title              Status code          code                 title
----------------------------------------------------------------------------------------------------------------
211111...................  Crude Petroleum and
                            Natural Gas Extraction.
                              crude petroleum        .................          211120  Crude Petroleum
                               extraction.                                               Extraction.
                           natural gas extraction..  pt.                        211130  Natural Gas Extraction.
211112...................  Natural Gas Liquid        pt.                        211130  Natural Gas Extraction.
                            Extraction.
212231...................  Lead Ore and Zinc Ore     pt.                        212230  Copper, Nickel, Lead,
                            Mining.                                                      and Zinc Mining.
212234...................  Copper Ore and Nickel     pt.                        212230  Copper, Nickel, Lead,
                            Ore Mining.                                                  and Zinc Mining.
333911...................  Pump and Pumping          pt.                        333914  Measuring, Dispensing,
                            Equipment Manufacturing.                                     and Other Pumping
                                                                                         Equipment
                                                                                         Manufacturing.
333913...................  Measuring and Dispensing  pt.                        333914  Measuring, Dispensing,
                            Pump Manufacturing.                                          and Other Pumping
                                                                                         Equipment
                                                                                         Manufacturing.
335221...................  Household Cooking         pt.                        335220  Major Household
                            Appliance Manufacturing.                                     Appliance
                                                                                         Manufacturing.
335222...................  Household Refrigerator    pt.                        335220  Major Household
                            and Home Freezer                                             Appliance
                            Manufacturing.                                               Manufacturing.
335224...................  Household Laundry         pt.                        335220  Major Household
                            Equipment Manufacturing.                                     Appliance
                                                                                         Manufacturing.
335228...................  Other Major Household     pt.                        335220  Major Household
                            Appliance Manufacturing.                                     Appliance
                                                                                         Manufacturing.
452111...................  Department Stores         pt.                        452210  Department Stores.
                            (except Discount
                            Department Stores).
452112...................  Discount Department
                            Stores.
                              insignificant          pt.                        452210  Department Stores.
                               perishable grocery
                               sales.
                              significant            pt.                        452311  Warehouse Clubs and
                               perishable grocery                                        Supercenters.
                               sales.
452910...................  Warehouse Clubs and       pt.                        452311  Warehouse Clubs and
                            Supercenters.                                                Supercenters.
452990...................  All Other General         nc.                        452319  All Other General
                            Merchandise Stores.                                          Merchandise Stores.
454111...................  Electronic Shopping.....  pt.                        454110  Electronic Shopping and
                                                                                         Mail-Order Houses.
454112...................  Electronic Auctions.....  pt.                        454110  Electronic Shopping and
                                                                                         Mail-Order Houses.
454113...................  Mail-Order Houses.......  pt.                        454110  Electronic Shopping and
                                                                                         Mail-Order Houses.
512210...................  Record Production.......  pt.                        512250  Record Production and
                                                                                         Distribution.
512220...................  Integrated Record         pt.                        512250  Record Production and
                            Production/Distribution.                                     Distribution.
517110...................  Wired Telecommunications  nc.                        517311  Wired Telecommunications
                            Carriers.                                                    Carriers.
517210...................  Wireless                  nc.                        517312  Wireless
                            Telecommunications                                           Telecommunications
                            Carriers (except                                             Carriers (except
                            Satellite).                                                  Satellite).
532220...................  Formal Wear and Costume   nc.                        532281  Formal Wear and Costume
                            Rental.                                                      Rental.
532230...................  Video Tape and Disc       nc.                        532282  Video Tape and Disc
                            Rental.                                                      Rental.
532291...................  Home Health Equipment     nc.                        532283  Home Health Equipment
                            Rental.                                                      Rental.
532292...................  Recreational Goods        nc.                        532284  Recreational Goods
                            Rental.                                                      Rental.
532299...................  All Other Consumer Goods  nc.                        532289  All Other Consumer Goods
                            Rental.                                                      Rental.
541711...................  Research and Development
                            in Biotechnology.
                              nanobiotechnologies    pt.                        541713  Research and Development
                               research and                                              in Nanotechnology.
                               experimental
                               development
                               laboratories.
                              except                 .................          541714  Research and Development
                               nanobiotechnologies                                       in Biotechnology
                               research and                                              (except
                               experimental                                              Nanobiotechnology).
                               development
                               laboratories.
541712...................  Research and Development
                            in the Physical,
                            Engineering, and Life
                            Sciences (except
                            Biotechnology).
                              nanotechnology         pt.                        541713  Research and Development
                               research and                                              in Nanotechnology.
                               experimental
                               development
                               laboratories.
                              except nanotechnology  .................          541715  Research and Development
                               research and                                              in the Physical,
                               experimental                                              Engineering, and Life
                               development                                               Sciences (except
                               laboratories.                                             Nanotechnology and
                                                                                         Biotechnology).
721310...................  Rooming and Boarding      nt.                        721310  Rooming and Boarding
                            Houses.                                                      Houses, Dormitories,
                                                                                         and Workers' Camps.
----------------------------------------------------------------------------------------------------------------
Key to Abbreviations.
pt. = Part of 2017 industry.
nc. = 6-digit NAICS codes changed without changing industries' definitions and titles.
nt. = NAICS industry title amended without changing the 6-digit code.

Size Standards for New Industries in NAICS 2017

    On October 22, 1999, SBA proposed to replace SIC with NAICS 1997 as 
the basis of industry definitions for its table of small business size 
standards (64 FR 57188). The proposed rule included a set of guidelines 
or rules that SBA applied to convert the size standards for industries 
under SIC to NAICS. The guidelines aimed to minimize the impact of 
applying a new industry classification system on SBA's size standards 
and on small businesses that qualified as small under the SIC based 
size standards. SBA received no negative comments against the proposed 
guidelines. SBA published its final rule on May 15, 2000 (65 FR 30386) 
(corrected on September 5, 2000, 65 FR 53533) adopting the resulting 
table of size standards based on NAICS 1997, as proposed. To be 
consistent, SBA used the same guidelines when it updated its

[[Page 44888]]

table of size standards to adopt NAICS 2002, NAICS 2007, and NAICS 2012 
revisions. In those updates as well, SBA received no adverse comments 
on using those guidelines, or on the resulting changes to the size 
standards. For the April 18, 2017 proposed rule to adopt NAICS 2017 for 
its size standards table, SBA also generally followed the same 
guidelines, as shown below in Table 2, ``General Guidelines to 
Establish Size Standards for New Industries under NAICS 2017.''

     Table 2--General Guidelines To Establish Size Standards for New
                       Industries Under NAICS 2017
------------------------------------------------------------------------
                                         The size standard for the NAICS
 If the NAICS 2017 industry is composed    2017 industry code will be:
                  of:
------------------------------------------------------------------------
1. A single NAICS 2012 industry or part  The same size standard as for
 of a single NAICS 2012 industry.         the NAICS 2012 industry or
                                          part.
2. Two or more NAICS 2012 industries;    ...............................
 two or more parts of an NAICS 2012
 industry; parts of two or more NAICS
 2012 industries; or one or more NAICS
 2012 industries and part(s) of one or
 more NAICS 2012 industries, and.
    2a. they all have the same size      The same size standard as for
     standard.                            the NAICS 2012 industries or
                                          parts.
    2b. they all have the same size      The same size standard as for
     measure (e.g., receipts,             the NAICS 2012 industry or
     employees, etc.) but do not all      part that most closely matches
     have the same size standard.         the economic activity
                                          described by the NAICS 2017
                                          industry, or
                                         The highest size standard among
                                          the NAICS 2012 industries and
                                          part(s) that comprise the
                                          NAICS 2017 industry, provided
                                          that the highest size standard
                                          does not include dominant or
                                          potentially dominant firms.
    2c. they have different size         The same size standard as for
     measures (i.e., for example, some    the NAICS 2012 industry or
     are based on receipts and others     part that most closely matches
     on employees) and hence do not all   the economic activity
     have the same size standard.         described by the NAICS 2017
                                          industry, or
                                         The highest size standard among
                                          the NAICS 2012 industries and
                                          part(s) that comprise the
                                          NAICS 2017 industry, provided
                                          that the highest size standard
                                          does not include dominant or
                                          potentially dominant firms.
------------------------------------------------------------------------
To apply this rule, SBA converts all size standards to a single measure
  (e.g., receipts, employees, etc.) using the size measure for the NAICS
  2012 industry or part(s) that most closely match the economic activity
  described by the NAICS 2017 industry or using the size measure that
  applies to most of the NAICS industries or parts comprising the NAICS
  2017 industry.

    In addition to the above general guidelines, in cases where a new 
industry is formed by merging multiple industries or their parts with 
substantially different levels or different measures of size standards, 
as detailed in the April 18, 2017 proposed rule, SBA also examined the 
relevant latest industry and Federal procurement data to determine an 
appropriate size standard for the new industry. Developed based on the 
above guidelines and analyses of the relevant data, where necessary, 
SBA's size standards for the new industries under NAICS 2017 are shown 
in Table 3, ``Size Standards for New Industries in NAICS 2017.'' Also 
shown in the table are the current size standards for the affected 
NAICS 2012 industries and their parts.
    As shown in Table 3, the size standards for most of the affected 
NAICS 2012 industries are not impacted and therefore remain unchanged 
under NAICS 2017. The majority of the changes consist of revisions to 
industry codes or titles, or mergers of two or more NAICS 2012 
industries or their parts to new industries without impacting their 
size standards. Of the 29 NAICS 2012 industries affected by the 
revision, adopting NAICS 2017 increases size standards for six 
industries and part of one industry and decreases for two. This would 
also result in changing the size standard measure for one industry from 
average annual receipts to number of employees. Size standards for 
twenty industries and part of one industry do not change.

Discussion of Comments

    For the April 18, 2017 proposed rule, SBA provided a 60-day comment 
period for the public to comment on proposed changes to size standards 
from the adoption of the NAICS 2017, which ended on June 19, 2017. SBA 
received three comments to the proposed rule, two of which were outside 
the scope of the proposed rule as discussed below.
    One commenter recommended that SBA change the size standard for the 
Military and Aerospace Equipment and Military Weapons exception to 
NAICS 541330 (Engineering Services) from average annual revenues to the 
number of employees.

                                                Table 3--Size Standards for New Industries in NAICS 2017
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                   Current size    Current size     NAICS 2017      NAICS 2017
     NAICS 2012 code        NAICS 2012 industry      standard       standard ($    size standard   size standard    NAICS 2017      NAICS 2017 industry
                                   title            (employees)      million)       (employees)     ($ million)        code                title
--------------------------------------------------------------------------------------------------------------------------------------------------------
211111..................  Crude Petroleum and              1,250
                           Natural Gas
                           Extraction.
                             crude petroleum               1,250  ..............           1,250  ..............          211120  Crude Petroleum
                              extraction.                                                                                          Extraction.
                             natural gas                   1,250  ..............           1,250  ..............          211130  Natural Gas
                              extraction.                                                                                          Extraction.
211112..................  Natural Gas Liquid                 750
                           Extraction.
212231..................  Lead Ore and Zinc Ore              750  ..............             750  ..............          212230  Copper, Nickel, Lead,
                           Mining.                                                                                                 and Zinc Mining.
212234..................  Copper Ore and Nickel            1,500
                           Ore Mining.

[[Page 44889]]

 
333911..................  Pump and Pumping                   750  ..............             750  ..............          333914  Measuring, Dispensing,
                           Equipment                                                                                               and Other Pumping
                           Manufacturing.                                                                                          Equipment
                                                                                                                                   Manufacturing.
333913..................  Measuring and                      750
                           Dispensing Pump
                           Manufacturing.
335221..................  Household Cooking                1,500  ..............           1,500  ..............          335220  Major Household
                           Appliance                                                                                               Appliance
                           Manufacturing.                                                                                          Manufacturing.
335222..................  Household Refrigerator           1,250
                           and Home Freezer
                           Manufacturing.
335224..................  Household Laundry                1,250
                           Equipment
                           Manufacturing.
335228..................  Other Major Household            1,000
                           Appliance
                           Manufacturing.
452111..................  Department Stores       ..............           $32.5  ..............           $32.5          452210  Department Stores.
                           (except Discount
                           Department Stores).
452112..................  Discount Department     ..............            29.5
                           Stores.
                             insignificant        ..............            29.5
                              perishable grocery
                              sales.
452112..................  Discount Department     ..............            29.5
                           Stores.
                             significant          ..............            29.5  ..............            29.5          452311  Warehouse Clubs and
                              perishable grocery                                                                                   Supercenters.
                              sales.
452910..................  Warehouse Clubs and     ..............            29.5
                           Supercenters.
452990..................  All Other General       ..............            32.5  ..............            32.5          452319  All Other General
                           Merchandise Stores.                                                                                     Merchandise Stores.
454111..................  Electronic Shopping...  ..............            32.5  ..............            38.5          454110  Electronic Shopping
                                                                                                                                   and Mail-Order
                                                                                                                                   Houses.
454112..................  Electronic Auctions...  ..............            38.5
454113..................  Mail-Order Houses.....  ..............            38.5
512210..................  Record Production.....  ..............             7.5             250  ..............          512250  Record Production and
                                                                                                                                   Distribution.
512220..................  Integrated Record                1,250
                           Production/
                           Distribution.
517110..................  Wired                            1,500  ..............           1,500  ..............          517311  Wired
                           Telecommunications                                                                                      Telecommunications
                           Carriers.                                                                                               Carriers.
517210..................  Wireless                         1,500  ..............           1,500  ..............          517312  Wireless
                           Telecommunications                                                                                      Telecommunications
                           Carriers (except                                                                                        Carriers (except
                           Satellite).                                                                                             Satellite).
532220..................  Formal Wear and         ..............            20.5  ..............            20.5          532281  Formal Wear and
                           Costume Rental.                                                                                         Costume Rental.
532230..................  Video Tape and Disc     ..............            27.5  ..............            27.5          532282  Video Tape and Disc
                           Rental.                                                                                                 Rental.
532291..................  Home Health Equipment   ..............            32.5  ..............            32.5          532283  Home Health Equipment
                           Rental.                                                                                                 Rental.
532292..................  Recreational Goods      ..............             7.5  ..............             7.5          532284  Recreational Goods
                           Rental.                                                                                                 Rental.
532299..................  All Other Consumer      ..............             7.5  ..............             7.5          532289  All Other Consumer
                           Goods Rental.                                                                                           Goods Rental.
541711..................  Research and                     1,000
                           Development in
                           Biotechnology.
                             nanobiotechnologies           1,000  ..............           1,000  ..............          541713  Research and
                              research and                                                                                         Development in
                              experimental                                                                                         Nanotechnology.
                              development
                              laboratories.
                             except                        1,000  ..............           1,000  ..............          541714  Research and
                              nanobiotechnologie                                                                                   Development in
                              s research and                                                                                       Biotechnology (except
                              experimental                                                                                         Nanobiotechnology).
                              development
                              laboratories.
541712..................  Research and                     1,000
                           Development in the
                           Physical,
                           Engineering, and Life
                           Sciences (except
                           Biotechnology).
                             nanotechnology                1,000  ..............           1,000  ..............          541713  Research and
                              research and                                                                                         Development in
                              experimental                                                                                         Nanotechnology.
                              development
                              laboratories.
                             except                        1,000  ..............           1,000  ..............          541715  Research and
                              nanotechnology                                                                                       Development in the
                              research and                                                                                         Physical,
                              experimental                                                                                         Engineering, and Life
                              development                                                                                          Sciences (except
                              laboratories.                                                                                        Nanotechnology and
                                                                                                                                   Biotechnology).
721310..................  Rooming and Boarding    ..............             7.5  ..............             7.5          721310  Rooming and Boarding
                           Houses.                                                                                                 Houses, Dormitories,
                                                                                                                                   and Workers' Camps.
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 44890]]

    Similarly, another commenter recommended that SBA consider changing 
the size standard for NAICS 488190 (Other Support Activities for Air 
Transportation) from revenues to employees. The commenters argued that 
the change would allow small businesses providing those services to 
continue to compete and succeed in a market dominated by large 
businesses which provide similar services as an ancillary function to 
their primary business. They provided an analysis of the Federal 
Procurement Data System--Next Generation (FPDS-NG) data to describe the 
competitive structure of their respective industries to support their 
recommendations.
    Since NAICS 541330 and 488190 were not impacted by the NAICS 2017 
revision, SBA did not review those industries nor did it propose any 
changes to their size standards in the April 2017 proposed rule. As 
part of the first five-year comprehensive review of size standards 
under the Small Business Jobs Act of 2010 (Jobs Act) (Pub. L. 111-240, 
September 27, 2010), in 2012, SBA increased the size standard for the 
Aerospace Equipment and Military Weapons exception to NAICS 541330 from 
$27 million to $35.5 million (77 FR 7489, (February 10 2012)) and 
increased the size standard for NAICS 488190 from $7 million to $30 
million (77 FR 10943, (February 24, 2012)). In 2014, they were further 
increased to $38.5 million and $32.5 million, respectively, for 
inflation (79 FR 33647 (June 12, 2014)). SBA will review these size 
standards again in the coming years as part of the second five-year 
review of size standards, as required by the Jobs Act. Interested 
parties, including the commenters, will have an opportunity to comment 
when SBA publishes the proposed rule for their industries.
    The third commenter recommended that SBA consider raising the small 
business size standard for the Home Health Equipment and Rental 
industry from $32.5 million to $35 million, an increase of 7.7 percent. 
The commenter argued the increase reflects the anticipated inflation 
and the cost of doing business over the next five years. The commenter 
also noted that a higher size standard for NAICS 532283 would allow 
some large firms to gain small business status and help some small 
firms retain their small business status into the future. Thus, as a 
result, that Federal agencies will have a larger pool of small 
businesses from which to draw for their small business procurement 
programs, the commenter concluded.
    The NAICS 2017 revision changed the 6-digit code for the Home 
Health Equipment and Rental industry from 532291 to 532283 without 
changing the industry definition. Accordingly, for new NAICS 532283, 
SBA applied the same $32.5 million that currently applies to NAICS 
532291. The adoption of NAICS 2017 led to changes in size standards 
only when the new industry was formed by merging the existing 
industries or industry parts with different size standards, not when 
only the 6-digit code changed.
    Every five years, SBA reviews all monetary based size standards for 
inflation and makes necessary adjustments. SBA's latest inflationary 
adjustment to size standards was in 2014, which resulted in an increase 
to the size standard for NAICS 532291 from $30 million to $32.5 
million. SBA anticipates issuing the next inflationary adjustment of 
all monetary based size standards sometime in 2019 and interested 
parties will have an opportunity to comment at that time. Additionally, 
as part of the second five-year review of size standards under the Jobs 
Act, SBA will also review all size standards in the coming years 
against the latest available industry and Federal market data and make 
appropriate adjustments. (In the first five-year review, SBA increased 
the size standard for NAICS 532291 from $7 million to $30 million (77 
FR 58747 (September 24, 2012)). The commenter will have an opportunity 
to comment when SBA publishes the proposed rule for NAICS Sector 53, 
Real Estate and Rental and Leasing.
    SBA considered each comment and determined that they were not 
germane to the purpose of the proposed rule, which was to adopt NAICS 
2017 as a basis for its table of size standards. The intent and 
methodology of the proposed rule did not provide for changing the size 
standard for an industry whose NAICS code was not affected by the NAICS 
revision, nor did it provide for adjusting a size standard for 
inflation or the cost of doing business. Accordingly, SBA is not 
modifying its April 18, 2017 proposed rule based on the comments 
received and is adopting the proposed rule, as published.

Justification for the October 1, 2017 Effective Date

    The Administrative Procedure Act (APA) requires that ``publication 
or service of a substantive rule shall be made not less than 30 days 
before its effective date, except * * * as otherwise provided by the 
agency for good cause found and published with the rule.'' 5 U.S.C. 
553(d)(3). The purpose of the APA provision delaying the effective date 
of a rule for 30 days after publication is to provide interested and 
affected members of the public sufficient time to adjust their behavior 
before the rule takes effect. For the reasons set forth below, SBA 
finds that good cause exists to make this final rule become effective 
on October 1, 2017, less than 30 days after it is published in the 
Federal Register.
    <bullet> In its August 8, 2016 notice, OMB stated that Federal 
statistical establishment data published for reference years beginning 
on or after January 1, 2017, should be published using NAICS 2017. 
October 1, 2017 is the start of the new Federal Government fiscal year 
following OMB's adoption of NAICS 2017 effective January 1, 2017, and 
is consistent with SBA's adoption of previous NAICS revisions effective 
at the start of the next fiscal year after the OMB's effective date. 
Federal contracting data and related statistics will be more consistent 
and comparable with past data for analyzing future small business 
activity if the revised size standards are adopted at the beginning of 
a new fiscal year. Similarly, users of size standards and Federal 
contracting data, such as Federal prime contractors developing their 
subcontracting plans, can have more consistent data to examine the past 
and future Federal contracting trends.
    <bullet> Small business size standards apply to most Federal 
agencies and their programs involving small businesses; the time lag 
between the OMB's effective date and SBA's update to its size standards 
has already given them time to implement the changes and develop 
training tools, if necessary. For instance, in July 2017, SBA provided 
Integrated Award Environment with an advance copy of the updated size 
standards table to update the Federal contracting databases such as the 
System for Award Management.
    <bullet> The rule is not significant under Executive Order 12866 
and the impacts from changes to size standards due to the adoption of 
the NAICS 2017 are minimal. This final rule impacts size standards for 
less than 10 industries involving about 60 firms, with a vast majority 
of them gaining small business status under the revised size standards. 
Those firms will benefit from an earlier effective date.
    <bullet> The impacted firms have had an opportunity to review the 
changes and submit comments during the notice and comment period for 
this rule. None of the three comments SBA received on the April 18, 
2017 proposed rule opposed the changes. The affected firms and other 
interested parties have had ample time to adjust their behavior, if 
necessary.

[[Page 44891]]

Compliance With Executive Orders 12866, 13563, 13771, 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

    OMB has determined that this final rule is not a ``significant 
regulatory action'' for purposes of Executive Order 12866. This rule 
incorporates the OMB's 2017 revisions of NAICS, which SBA uses to 
identify industries in the United States for purposes of establishing 
small business size standards. As discussed in the Supplementary 
Information above, the size standard of some industries would change 
because of the NAICS 2017 revisions. However, SBA has determined that 
virtually all businesses currently defined as small under the NAICS 
2012 based size standards will continue to be small under the NAICS 
2017 based size standards. This rule will also affect other Federal 
Government programs that provide a benefit for small businesses. In 
order to help explain the need of this rule and the rule's potential 
benefits and costs, SBA is providing below a Cost Benefit Analysis. 
This final rule is also not a ``major rule'' under the Congressional 
Review Act, 5 U.S.C. 800.

Cost Benefit Analysis

1. Is there a need for the regulatory action?
    SBA believes that adopting small business size standards based on 
NAICS 2017 is in the best interests of small businesses. SBA's mission 
is to aid and assist small businesses through a variety of financial, 
procurement, business development, and advocacy programs. To assist the 
intended beneficiaries of these programs effectively, SBA establishes 
numerical definitions to determine which businesses are deemed eligible 
for Federal small business assistance. NAICS 2017 provides the latest 
industry definitions reflecting the latest changes in industry 
structure. The Small Business Act (the Act) provides SBA's 
Administrator with the responsibility for establishing definitions for 
small business. The Act also requires that small business definitions 
vary from industry to industry reflecting differences among the various 
industries. 15 U.S.C. 632(a). By analyzing and reviewing size standards 
based on the latest NAICS definitions, SBA can more accurately and 
appropriately fulfill its mandate. If SBA does not use the latest 
industry definitions, size standards would not accurately reflect 
differences among industries. In addition, the Jobs Act requires SBA to 
review all size standards and make necessary adjustments to reflect 
current industry and market conditions at least every five years. To 
better serve this mandate, SBA needs to evaluate industry data based on 
the latest NAICS industry definitions available. In this final rule, 
SBA generally followed the same guidelines that the Agency used for 
adopting prior NAICS revisions for its size standards, as spelled out 
under the Supplemental Information section, above. For certain NAICS 
2017 industries involving NAICS 2012 industries with substantially 
different size standards, SBA also analyzed the relevant industry and 
program data to determine the size standards for them. Size standards 
based on NAICS 2017 industry definitions and corresponding data will 
serve SBA's mission more effectively.
2. What are the potential benefits and costs of this regulatory action?
    The vast majority of the changes from NAICS 2012 to NAICS 2017 
consist of revisions to industry titles or 6-digit codes or mergers of 
some NAICS 2012 industries or their parts to form the industries in 
NAICS 2017 without impacting their size standards. Of the 29 affected 
NAICS 2012 industries or their parts, SBA's size standards using NAICS 
2017 will result in increases to size standards for six NAICS 2012 
industries and part of one industry, decreases for two industries, and 
the change of size standard from average annual receipts to number of 
employees for one industry. The size standards will remain unchanged 
for other affected industries or parts.
    Based on the 2012 Economic Census data for the affected NAICS 2012 
industries, SBA estimates that approximately 60 additional businesses 
would gain small business status under the revised size standards. That 
represents about 0.1 percent of the number of small businesses in the 
affected industries. For the two industries for which the size standard 
will decrease, SBA also estimates that fewer than five firms that 
qualify as small under current size standards under NAICS 2012 will no 
longer qualify. However, almost all of those firms do not currently 
participate in any small business programs.
    The benefits of adopting NAICS 2017 and the resulting revisions to 
size standards will accrue to three groups in the following ways: (1) 
Some businesses that are above their current size standards may gain 
small business status, thereby becoming eligible to participate in 
Federal small business assistance programs, including SBA's financial 
assistance programs, economic injury disaster loans, and Federal 
procurement opportunities intended for small businesses; (2) growing 
small businesses that are close to exceeding the current size standards 
for their NAICS 2012 industry may retain their small business status 
under NAICS 2017, and can continue participating in the above programs; 
and (3) Federal agencies will have a larger pool of small businesses 
from which to draw for their small business procurement programs 
because they will be able to define more accurately the principal 
purposes of their procurements under NAICS 2017, as required by 13 CFR 
121.402(b).
    Additional firms gaining small business status under NAICS 2017 may 
benefit under SBA's various business development and contracting 
programs. These include the 8(a) Business Development program and 
programs benefiting small businesses located in Historically 
Underutilized Business Zones (HUBZones), Women Owned Small Businesses 
(WOSBs), and Service Disabled Veteran Owned Small Businesses (SDVOSBs). 
Added competition may also result in lower prices for some Federal 
contracts reserved for small businesses, although SBA cannot quantify 
this benefit. Based on data for fiscal years 2013-2015, SBA estimates 
that approximately $700,000 in Federal contracts could be awarded to 
the newly defined small businesses under the size standards revisions 
due to the adoption of NAICS 2017.
    Under SBA's 7(a) and 504 Loan Programs, SBA would be able to 
guarantee more loans, although, in this case too, the number and amount 
of additional loans cannot be estimated accurately. Based on the Agency 
7(a) and 504 loan data for fiscal years 2014-2016, SBA estimates that 
about two additional loans, totaling approximately $200,000, could be 
made to the newly defined small businesses under the NAICS 2017 size 
standards. Under the Jobs Act, SBA can now guarantee substantially 
larger loans than in the past. Additionally, the Jobs Act established 
an alternative size standard for SBA's 7(a) and 504 Loan Programs for 
applicants that do not meet the size standards for their industries. 
Specifically, section 1116 of the Jobs Act provides that if a firm 
applying for a 7(a) or 504 loan does not meet the size standard for its 
industry, it might still qualify if it has a tangible net worth that 
does not exceed $15 million and an average net income after Federal 
income taxes (excluding any carry-over losses) for its preceding two 
completed fiscal years that does not exceed $5 million. Thus, the 
updated size standards may

[[Page 44892]]

result in an increase in SBA's loan guarantees to small businesses in 
the affected industries, but SBA cannot quantify this impact.
    Newly defined small businesses will also benefit from SBA's 
Economic Injury Disaster Loan (EIDL) Program. Since this program is 
contingent on the occurrence and severity of a disaster, SBA cannot 
make a meaningful estimate of future EIDL benefit.
    To the extent that newly defined small firms under NAICS 2017 could 
become active in Federal procurement programs, this may entail some 
additional administrative costs to the Federal Government associated 
with additional bidders for Federal small business procurement 
opportunities. More firms may seek SBA's guaranteed loans. More will be 
enrolled in the SBA's Dynamic Small Business Search database. Since 
more firms will qualify as small, more may also seek certification as 
8(a) or HUBZone firms, or qualify for WOSB, SDVOSB, and/or small 
disadvantaged business (SDB) status. It is important to point out that 
most business entities that are already registered in SAM will not be 
required to update their SAM profiles. However, it will be incumbent on 
registrants to review their profiles to ensure that they have the 
correct NAICS codes. SAM requires that registered companies review and 
update their profiles annually, and therefore, businesses will need to 
pay particular attention to the changes to determine if they might 
affect them. They will also have to verify and update, if necessary, 
their Representations and Certifications in SAM. Further, firms are 
required to verify that their size representation in SAM is accurate 
prior to submitting an offer for a contract. FAR 52.204-8(d).
    Among the newly qualified businesses seeking SBA's assistance, 
there could be some additional costs associated with compliance and 
verification of small business status and protests of small business 
status. These added costs are likely to be minimal because mechanisms 
are already in place to handle these administrative requirements.
    The costs to the Federal Government may be higher on some Federal 
contracts under the higher revised size standards under NAICS 2017. 
With more businesses defined as small, Federal agencies might choose to 
set aside more contracts for competition among small businesses rather 
than using full and open competition. The movement from unrestricted to 
set-aside contracting will likely result in competition among fewer 
total bidders, although there will be a larger pool of small businesses 
to submit offers. In addition, higher costs may result when additional 
full and open contracts are awarded to HUBZone businesses because of a 
price evaluation preference. The additional costs associated with fewer 
bidders, however, will likely be minor since, as a matter of law, 
procurements may be set aside for small businesses or reserved for the 
8(a), HUBZone, WOSB, or SDVOSB Programs only if awards are expected to 
be made at fair and reasonable prices.
    The revised size standards may have some distributional effects 
among large and small businesses. Although SBA cannot estimate with 
certainty the actual outcome of gains and losses among small and large 
businesses, there are several likely impacts. There may be a transfer 
of some Federal contracts from large businesses to small businesses. 
Large businesses may have fewer Federal contract opportunities as 
Federal agencies decide to set aside more Federal contracts for small 
businesses. In addition, some agencies may award more Federal contracts 
to HUBZone firms instead of large businesses since HUBZone concerns may 
be eligible for price evaluation adjustments when they compete on full 
and open procurement opportunities. Similarly, currently defined small 
businesses may receive fewer Federal contracts due to the increased 
competition from more businesses defined as small under NAICS 2017. 
This transfer may be offset by more Federal procurements set aside for 
all small businesses. The number of newly defined and expanding small 
businesses that are willing and able to sell to the Federal Government 
will limit the potential transfer of contracts away from large and 
small businesses under the existing size standards. SBA cannot estimate 
with precision the potential distributional impacts of these transfers.
    SBA's adoption of NAICS 2017 and resulting revisions to size 
standards is consistent with SBA's statutory mandate to assist small 
business by providing access to capital and credit, Government 
contracts, and management and technical assistance. Updated size 
standards based on the latest industry definitions ensure that Federal 
small business assistance is more effectively targeted to its intended 
beneficiaries. The Small Business Act states that ``the Administrator 
shall ensure that the size standard varies from industry to industry to 
the extent necessary to reflect the differing characteristics of the 
various industries.'' 15 U.S.C. 632(a)(3). With the adoption of the 
latest industry definitions in NAICS 2017, SBA's size standards are 
more consistent with the differing characteristics among the various 
industries.

Executive Order 13563

    A description of the need for this regulatory action and benefits 
and costs associated with this action including possible distribution 
impacts that relate to Executive Order 13563 are included above in the 
Cost Benefit Analysis.
    To engage interested parties in this action, SBA reached out to all 
Federal agencies advising them that the Agency plans to update its 
table of size standards to NAICS 2017, effective October 1, 2017, and 
that agencies must continue using the current size standards until that 
date. Adopting the updated size standards on October 1, 2017 is 
consistent with SBA's adoptions of previous NAICS revisions at the 
beginning of the new fiscal year following the OMB's January 1 
effective date of NAICS revisions for Federal statistical agencies.
    Unlike the previous NAICS revisions which SBA adopted for its size 
standards either through a direct final rule or through an interim 
final rule, for the adoption of NAICS 2017 revision, SBA issued a 
proposed rule, seeking comments to better engage the public in the 
process. SBA received no germane adverse comments to the proposed rule. 
SBA is adopting the updated table of size standards, effective October 
1, 2017. SBA will also issue a press release on the publication of the 
final rule and update the ``What's New with Size Standards'' page on 
its Web site at www.sba.gov/size.

Executive Order 13771

    This rule is not an E.O. 13771 regulatory action because this rule 
is not significant under Executive Order 12866.

Executive Order 12988

    This action meets applicable standards set forth in Sections 3(a) 
and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize 
litigation, eliminate ambiguity, and reduce burden. The action does not 
have retroactive or preemptive effect.

Executive Order 13132

    For purposes of Executive Order 13132, SBA has determined that this 
final rule will not have substantial, direct effects on the States, on 
the relationship between the national government and the States, or on 
the distribution of power and responsibilities among the various levels 
of government. Therefore, SBA has determined that this final rule has

[[Page 44893]]

no Federalism implications warranting preparation of a Federalism 
assessment.

Paperwork Reduction Act

    For the purpose of the Paperwork Reduction Act, 44 U.S.C. Ch. 35, 
SBA has determined that this final rule would not impose any new 
reporting or recordkeeping requirements.

Final Regulatory Flexibility Analysis

    Under the Regulatory Flexibility Act (RFA), this final rule may 
have an impact on some small businesses in industries for which size 
standards have been revised. As described above, this rule may affect 
small businesses applying for Federal government contracts, loans under 
SBA's 7(a), 504, and Economic Injury Disaster Loan Programs, and 
assistance under other Federal small business programs.
    Immediately below, SBA sets forth a final regulatory flexibility 
analysis (FRFA) of this final rule addressing the following questions: 
(1) What are the need for and objectives of the rule?; (2) What are 
SBA's description and estimate of the number of small businesses to 
which the rule will apply?; (3) What are the projected reporting, 
recordkeeping, and other compliance requirements of the rule?; (4) What 
are the relevant Federal rules that may duplicate, overlap, or conflict 
with the rule?; and (5) What alternatives will allow the Agency to 
accomplish its regulatory objectives while minimizing the impact on 
small businesses?
1. What are the need for and objectives of the rule?
    The Small Business Act requires that small business size standards 
vary from industry to industry reflecting the differing characteristics 
of the various industries. SBA uses the latest NAICS as a basis of 
industry definitions for its table of size standards. As part of its 
five-year review of and revisions to NAICS industry definitions, OMB 
published its latest NAICS revision, NAICS 2017, on August 8, 2016. 
According to OMB's notice, Federal establishment and industry data for 
reference years beginning on or after January 1, 2017 should be 
published using NAICS 2017. This rule amends SBA's small business size 
regulations to incorporate NAICS 2017 into its table of size standards. 
This not only makes SBA's size standards more reflective of the latest 
industry differences but also makes them more consistent with latest 
industry data the Agency uses to establish, review or adjust size 
standards. Updating size standards to the latest industry definitions 
also serves the SBA's mandate to review all size standards and make 
appropriate adjustments to reflect market conditions under the Jobs 
Act.
2. What are SBA's description and estimate of the number of small 
businesses to which the rule will apply?
    With the update of size standards to the latest industry 
definitions under NAICS 2017, Federal small business assistance is more 
effectively targeted to its intended beneficiaries. The adoption of 
NAICS 2017 will result in increases in size standards for six 
industries and part of one industry under NAICS 2012 and decreases for 
two. The size standards for the rest of the 29 affected industries will 
remain unchanged. In industries whose size standards have increased due 
to the adoption of NAICS 2017, about 60 firms above the current size 
standards will qualify as small under the updated size standards, 
thereby making them eligible for Federal small business assistance 
programs. Based on the recent data, SBA estimates that approximately 
$700,000 in Federal contracts and about $200,000 in SBA loans could be 
awarded to the newly defined small businesses under the updated size 
standards. The updated size standards will enable more small businesses 
to maintain their small business size status for a longer period. In 
the two NAICS 2012 industries for which the size standard will 
decrease, about 3-4 firms below the current size standards will lose 
their small business size status under the NAICS 2017 based size 
standards. However, the program data suggests that this will not cause 
much impact on them. Currently, they are not participating in any small 
business programs. Additionally, in both industries, Federal 
contracting and SBA's loan activities are quite insignificant.
3. What are the projected reporting, recordkeeping and other compliance 
requirements of the rule?
    The size standard changes due to the adoption of NAICS 2017 impose 
no additional reporting or recordkeeping requirements on small 
businesses. However, qualifying for Federal small business contracting 
and other programs may require businesses to register in SAM and 
recertify in SAM that they are small at least once annually. Therefore, 
the newly qualified small businesses opting to participate in those 
programs must comply with SAM requirements. There are no costs 
associated with either SAM registration or annual recertification. 
Changing size standards alters the access to SBA's financial and other 
Federal programs that assist small businesses, but does not impose a 
regulatory burden because size standards neither regulate nor control 
business behavior.
4. What are the relevant Federal rules, which may duplicate, overlap, 
or conflict with the rule?
    Under section 3(a)(2)(C) of the Small Business Act, 15 U.S.C. 
632(a)(2)(c), Federal agencies must generally use SBA's size standards 
to define a small business, unless specifically authorized by statute 
to do otherwise. In 1995, SBA published in the Federal Register a list 
of statutory and regulatory size standards that identified the 
application of SBA's size standards as well as other size standards 
used by Federal agencies (60 FR 57988 (November 24, 1995)). 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 RFA authorizes a Federal 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)). SBA is not aware of any Federal rule that would 
duplicate or conflict with establishing or updating size standards.
5. What alternatives will allow the Agency to accomplish its regulatory 
objectives while minimizing the impact on small entities?
    By law, SBA is required to develop numerical size standards for 
establishing eligibility for Federal small business assistance 
programs. Other than varying levels of size standards by industry and 
changing the size measures, no practical alternative exists to the 
systems of numerical size standards. SBA considered continuing to use 
NAICS 2012 as a basis of industry definitions for its table of size 
standards. However, that would render SBA's table of size standards 
incompatible with Federal industry and establishment statistics and 
other databases.

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 amends 13 CFR part 
121 as follows:

[[Page 44894]]

PART 121--SMALL BUSINESS SIZE REGULATIONS

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

    Authority:  15 U.S.C. 632, 634(b)(6), 662, and 694a(9).


0
2. In Sec.  121.201, amend the table, ``Small Business Size Standards 
by NAICS Industry'' as follows:
0
a. Remove the entries for 211111 and 211112;
0
b. Add entries for 211120 and 211130;
0
c. Remove the entries for 212231 and 212234;
0
d. Add an entry for 212230;
0
e. Remove the entry 333911;
0
f. Remove the entry 333913;
0
g. Add an entry for 333914;
0
h. Add an entry for 335220;
0
i. Remove the entries for 335221, 335222, 335224, and 335228;
0
j. Remove the entries for 452111, 452112, 452910, and 452990;
0
k. Add entries for 452210, 452311, and 452319;
0
l. Add an entry for 454110;
0
m. Remove the entries for 454111, 454112, and 454113;
0
n. Remove the entries for 512210 and 512220;
0
o. Add an entry for 512250;
0
p. Remove the entries for 517110 and 517210;
0
q. Add entries for 517311 and 517312;
0
r. Remove the entries for 532220, 532230, 532291, 532292, and 532299;
0
s. Add entries for 532281, 532282, 532283, 532284, and 532289;
0
t. Remove the entry for 541711;
0
u. Remove the entry for 541712;
0
v. Add entries for 541713 and 541714;
0
w. Add an entry for 541715;
0
x. Revise the NAICS industry title of the entry for 721310 to read, 
``Rooming and Boarding Houses, Dormitories, and Workers' Camps''; and
0
y. Revise footnote 11 at the end of the table.
    The additions and revisions read as follows:


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

* * * * *

----------------------------------------------------------------------------------------------------------------
                                                                                  Size standards  Size standards
               NAICS codes                       NAICS U.S. industry title        in millions of   in number of
                                                                                      dollars        employees
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
211120...................................  Crude Petroleum Extraction...........  ..............           1,250
211130...................................  Natural Gas Extraction...............  ..............           1,250
 
                                                  * * * * * * *
212230...................................  Copper, Nickel, Lead, and Zinc Mining  ..............             750
 
                                                  * * * * * * *
333914...................................  Measuring, Dispensing, and Other       ..............             750
                                            Pumping Equipment Manufacturing.
 
                                                  * * * * * * *
335220...................................  Major Household Appliance              ..............           1,500
                                            Manufacturing.
 
                                                  * * * * * * *
452210...................................  Department Stores....................            32.5  ..............
452311...................................  Warehouse Clubs and Supercenters.....            29.5  ..............
452319...................................  All Other General Merchandise Stores.            32.5  ..............
 
                                                  * * * * * * *
454110...................................  Electronic Shopping and Mail-Order               38.5  ..............
                                            Houses.
 
                                                  * * * * * * *
512250...................................  Record Production and Distribution...  ..............             250
 
                                                  * * * * * * *
517311...................................  Wired Telecommunications Carriers....  ..............           1,500
517312...................................  Wireless Telecommunications Carriers   ..............           1,500
                                            (except Satellite).
 
                                                  * * * * * * *
532281...................................  Formal Wear and Costume Rental.......            20.5  ..............
532282...................................  Video Tape and Disc Rental...........            27.5  ..............
532283...................................  Home Health Equipment Rental.........            32.5  ..............
532284...................................  Recreational Goods Rental............             7.5  ..............
532289...................................  All Other Consumer Goods Rental......             7.5  ..............
 
                                                  * * * * * * *
541713...................................  Research and Technology in             ..............      \11\ 1,000
                                            Nanotechnology \11\.
541714...................................  Research and Technology in             ..............      \11\ 1,000
                                            Biotechnology (except
                                            Nanobiotechnology) \11\.
541715...................................  Research and Development in the        ..............      \11\ 1,000
                                            Physical, Engineering, and Life
                                            Sciences (except Nanotechnology and
                                            Biotechnology) \11\.
Except,..................................  Aircraft, Aircraft Engine and Engine   ..............      \11\ 1,500
                                            Parts \11\.
Except,..................................  Other Aircraft Parts and Auxiliary     ..............      \11\ 1,250
                                            Equipment \11\.
Except,..................................  Guided Missiles and Space Vehicles,    ..............      \11\ 1,250
                                            Their Propulsion Units and
                                            Propulsion Parts \11\.
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
Footnotes
 * * * * * * *
\11\NAICS codes 541713, 541714, and 541715 --

[[Page 44895]]

 
\(a)\ ``Research and Development'' means laboratory or other physical research and development. It does not
  include economic, educational, engineering, operations, systems, or other nonphysical research; or computer
  programming, data processing, commercial and/or medical laboratory testing.
\(b)\ For research and development contracts requiring the delivery of a manufactured product, the appropriate
  size standard is that of the manufacturing industry.
\(c)\ For purposes of the Small Business Innovation Research (SBIR) and Small Business Transfer Technology
  (STTR) programs, the term ``research'' or ``research and development'' means any activity which is (A) a
  systematic, intensive study directed toward greater knowledge or understanding of the subject studied; (B) a
  systematic study directed specifically toward applying new knowledge to meet a recognized need; or (C) a
  systematic application of knowledge toward the production of useful materials, devices, and systems or
  methods, including design, development, and improvement of prototypes and new processes to meet specific
  requirements. See 15 U.S.C. 638(e)(5) and section 3 of the SBIR and STTR policy directives available at
  www.sbir.gov. For size eligibility requirements for the SBIR and STTR programs, see Sec.   121.702 of this
  part.
\(d)\ ``Research and Development'' for guided missiles and space vehicles includes evaluations and simulation,
  and other services requiring thorough knowledge of complete missiles and spacecraft.

* * * * *

    Dated: September 8, 2017.
Linda E. McMahon,
Administrator.
[FR Doc. 2017-20705 Filed 9-26-17; 8:45 am]
 BILLING CODE 8025-01-P


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